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Centrica cuts spending

Written by Business World, on 19th Feb 2015. Posted in Financial

article headlineBritain's largest utility Centrica has cut its 2015-2016 exploration and production (E&P) budget by 400 million pounds ($618 million) after weak energy prices drove down full-year profit. Centrica has also slashed its dividend, to 13.5 pence per share, from 17 pence last year, and said future payments would be cut by 30 percent. Centrica shares traded eight percent lower shortly after the London market opened. The FTSE 100 company reported a 35 percent fall in 2014 adjusted operating profit, with the lower energy prices eating into earnings at both its production and supply units. "2014 was a very difficult year for Centrica and the recent fall in oil and gas prices creates further challenge. We are cutting investment and costs in response," Iain Conn, Centrica's new chief executive, BP's former head of downstream activities, said in a statement. The firm had already announced a tighter 2015 capital expenditure programme in November, when it also prepared investors for lower than expected 2014 earnings due to mild weather and lower output at nuclear plants. Since then, low oil prices have had a knock-on effect on Centrica's upstream business, which mainly produces gas. The low commodity prices led to to post-tax impairment of 1.385 billion pounds on its E&P and power assets Centrica said. Plans to sell three of its large combined-cycle gas turbine (CCGT) power plants, announced last May have also been dropped after the company said bids it received for the plants fell short of expectations. The company said it would launch a strategic review of its operations which it expected to conclude by July. (Reuters) For more visit: www.businessworld.ie

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