Taking stock: Shares mark Laidlaw's time at Centrica

 

To most industry observers, Centrica, owner of British Gas, is a major British success story.

Sam Laidlaw

Sam Laidlaw: Chief executive taken the first step to break the old utility business model

It has a dominant position in the market, with a mind-boggling 15.7m gas and electricity customers – more than half of the country's households.

It produces huge profits. Its announcement last year of a record pre-tax profit of £1.9bn lead to the inevitable protests about profits and prices.

And its far-thinking chief executive, Sam Laidlaw, has enviably positioned the company in the green market, with a major share of Britain's nuclear industry and a thriving wind farm business.

He has even taken the first step to break the old utility business model. Instead of concentrating on selling more gas, he is trying to make money by encouraging customers to use less – through energy advisers, providing smart meters and the like.

So why is there a mood within the company that it has not achieved a well justified breakthrough in its share price?

On April 30, 2007, the shares were 345p. Today they are 320p. Last year, they rose by 8.3%, but the firm's only UK rival, Scottish & Southern Energy, saw its shares go up by 23%.

Therein lies the sense of disappointment at the top of the company. To put it crudely, despite all Laidlaw's efforts in his three years of leadership, he has not managed to engineer the big deal to transform the company and its share price. It is not for want of trying.

I understand that over the period, senior executives have plotted and planned the perfect takeover. It targeted SSE with its ten million gas and electricity customers. For reasons of price and monopoly considerations, such a move has not yet taken place.

And with the regulator Ofgem on the warpath on behalf of consumers, it is very unlikely that such a union would receive its approval.

Then there is the US. Laidlaw has made no secret of his desire to become a big player there. There are big bucks to be made out of the energy-hungry Yanks.

Centrica's American business, Direct Energy, is one of the biggest players in America, with five million customers. It owns 4,550 gas wells, wind farms and three gas-fired power plants. But that is not enough.

Once again, as in Britain, a big acquisition target was identified but a deal to buy it is understood to have broken down over price.

Perhaps one should be relieved that the boss of such a cash-rich company is not willing to overpay.

Getting too big in the US, as BP found, could become a problem.

One thing is clear, though: Laidlaw has not given up on that one transformational deal.