The owner of British Gas has replaced its chairman and ousted its outgoing chief executive with immediate effect amid deepening financial woes.
Centrica has appointed its chief financial officer, Chris O’Shea, as the interim chief executive while its new chairman, Scott Wheway, hunts for a permanent replacement.
Wheway replaces Charles Berry, who is stepping down from the board after taking medical leave last month.
Centrica’s outgoing chief, Iain Conn, had expected to remain in his role until a permanent replacement was found. He agreed to leave the company last summer as it swung to a loss for the first half of 2019 and slashed shareholder payouts.
The decision to hasten his exit comes weeks after Conn revealed a £1bn loss for the full financial year, and the lowest ever revenues from the British Gas business.
It marks the end of a difficult five-year tenure for Conn in which the supplier struggled against rising competition in the energy market and a government cap on prices.
The new leadership team is expected to face a difficult financial situation after the collapse of global oil prices and ongoing market gloom caused by the coronavirus pandemic. Those challenges have already pushed the market value of the biggest UK energy supplier to its lowest levels since Centrica was formed in 1997.
Wheway said: “I’m acutely aware that I’m taking this role at a time when we need to navigate our way through the current volatility caused by the impact of coronavirus. Protecting our employees and customers is a priority for us, particularly those who are vulnerable.”
He said Centrica would remain focused on “structural simplification”, improving its efficiency and growing its customer-facing businesses. “I will immediately be concentrating on completing the search for a CEO for Centrica, which includes both internal and external candidates,” he said.
Centrica was forced to write off £476m against its North Sea oil and gas business, Spirit Energy, last year after oil prices fell to an average of $64.36 (£53.17) a barrel from an average of $71.34 a barrel in 2018.
In recent weeks oil prices have plunged, and remained at a four-year low of just below $30 a barrel on Tuesday. The drop threatens to derail Centrica’s plans to sell the North Sea business as part of its financial turnaround plan.
The company had expected to receive bids for its 69% stake in Spirit Energy by the end of this month, but an industry source said it would not be possible to determine its value during the current market volatility and the bidding “would most likely be delayed”.
Centrica is also in talks with a consortium of investors to sell its stake in the UK’s nuclear power reactors, a process which could also be delayed by the macroeconomic impact of Covid-19 and ongoing technical trouble at two of the reactors.
The share price of the FTSE 100 energy firm – which is supported by an army of small shareholders – has tumbled to below 40p, the lowest price in more than 20 years and around one tenth of its value in 2013.
Around 1.5 million individuals bought shares in British Gas for 135p when it was first privatised in the late 1980s after the “Tell Sid” campaign. About 600,000 individuals continue to hold shares in Centrica, which became the supplier’s parent company a decade later.
The company has been considered a takeover target by industry analysts for years because of the steady decline of its share price, and its latest financial woes have reignited concerns over its long-term future.
Wheway also thanked Conn for his “continued commitment and resilience in the face of unprecedented challenges during his tenure as CEO … The board wishes Iain well and thanks him for his contribution.”