UPDATE 1-UK's Centrica to sell North American energy business as H1 profit drops

  • Jul 24, 2020
  • Reuters - Africa

LONDON, July 24 (Reuters) - British Gas owner Centrica Plc said on Friday it will sell its North American subsidiary Direct Energy for $3.63 billion in cash as it reported a profit slump in first-half earnings due to impact from COVID-19 and low commodity prices.

Centrica said it would sell the energy and services company to U.S. integrated power company NRG Energy and use the cash to reduce net debt and contribute to its pension schemes.

It said it would focus on its core home markets, the United Kingdom and Ireland, following the sale which its board believes is in the best interests of the company and its shareholders.

“This disposal is aligned to our strategy to become a simpler, leaner business. We intend to use the proceeds to significantly reduce net debt and to make a material contribution to our pension schemes,” Centrica said.

Last month, Centrica said it planned to cut around 5,000 jobs, almost 20% of its global workforce, as it deepened its restructuring efforts in the wake of the COVID-19 pandemic.

The group posted a 14% drop in half-year operating profit to 343 million pounds ($436.3 million) from 399 million a year earlier. This was due to the pandemic which reduced energy use and weakened commodity prices.

Centrica did not declare an interim dividend. It also said it had paused the planned divestment of its 20% stake in Britain’s nuclear energy fleet and the planned sale of North Sea oil producer Spirit Energy.

$1 = 0.7862 pounds Reporting by Nina Chestney in London, additional reporting by Shanima A in Bengaluru; editing by Emelia Sithole-Matarise