A bit of pre-Christmas City cheer from Centrica, with the revelation that the Scottish Gas owner has lifted its full-year earnings outlook and stemmed the flow of customers switching to other energy suppliers.
To keep the number of UK home energy accounts flat at 14.3 million since its first half is no mean feat. Centrica had haemorrhaged 400,000 customers in the first six months of the year.
The group’s policy of launching new tariffs, freezing its standard variable rate and improving customer service have born fruit. Having said that, it could be that austerity-hit energy customers are keeping a gimlet eye on the virtual running commentary that is tariff changes and are quick to vote with their feet when the picture changes even at the margins between competitors. Smaller new players in the sector have also focused minds in a microcosm of what is happening in supermarket retailing with Aldi and Lidl.
The shares were marked up 5.6 per cent as the City also noted that Centrica’s £750 million cost-cutting programme by 2020 is ahead of schedule. It says it now expects to have taken £300m off overheads by end-2016, up from an earlier target of £200m, including more than 3,000 redundancies in its British Gas and Irish energy division. All in all, a good day at the corporate office.
An Alliance to be noticed
Alliance Trust has done its level best in recent years to show investment trusts are not sleepy backwaters, with rebel shareholders, boardroom shake-ups, volatile share price.
The key outcome of the Dundee-based group’s strategic review is it moving from a single investment manager to multiple external equity managers as part of a ratcheting up of its performance targets.
It is also selling its in-house Alliance Trust Investments business to Liontrust Asset Management for up to £30m. The general direction of travel is for the trust to move to an outsourced “manager of manager” model. To this end, eight top-rated equity managers will be appointed with the remit of creating a “best ideas” fund. In short, a mix of outsourcing benefits and expert oversight. It is differentiated.