Centrica dividend cut a "major blow" for shareholders, says Hargreaves Lansdown

19th Feb 2015 09:50

The consensus stance of a 'hold' at Centrica is likely to see downwards pressure, according to Hargreaves Lansdown Stockbrokers, after the energy provider disappointed the market on Thursday.Shares were down nearly 9% at 256.2p in morning trade after the British Gas owner slashed its 2014 dividend, future payout policy and capital expenditure plans, and warned that earnings for next year will be lower than expected."Despite previous business diversification, Centrica has been hit on all fronts," said Hargreaves equity analyst Keith Bowman."Lower consumption as a result of warm UK weather and falling energy prices have impacted on its British Gas supply business, whilst the drop in oil and gas prices is bad news for its expanded exploration division. Conditions for the company in the US have been equally difficult, with political uncertainty and a competition investigation adding unwelcomed distraction for management."Bowman said the dividend cut is a "major blow" to investors with the search for income yield becoming ever harder in the current environment with interest rates at a record low.Meanwhile, the uncertainty surrounding a Competition and Markets Authority investigation into the industry "further undermines confidence"."In all, Centrica has for some time been walking a tightrope of issues between government, customers and shareholders, with shareholders today the clear losers," Bowman said.