Centrica bloodied in profits and jobs terms but divi unbowed

Comment Martin Flanagan

It would be simplistic to view Scottish Gas owner Centrica’s decision to axe a further 4,000 jobs over three years as a crude response to the government’s moves to impose a price cap on standard variable tariffs.

But Centrica chief executive Iain Conn wasn’t shy about citing “political and regulatory intervention” in the UK energy market as part of the context for the action, which will affect both its UK home and business units as it looks to meet a cost-cutting target of £1.25 billion per year by 2020. The new cuts mean Centrica will have shed about one in four of its workforce over the past six years, although its press officer declined to tell The Scotsman how many it employs at Scottish Gas. A curious response to an uncontroversial question, but there you go.

In the wider piece, unintended consequences is clearly a part of the sector subtext, as the company and other members of the UK’S energy Big Six suffer squeezed profits and a haemorrhaging customer base as dozens of rival energy suppliers flex their muscles.

Workers will be miffed that the heavier hand put by the government on Centrica and its rivals, and other industry pressures, has not stopped the company managing to maintain its dividend.

Conn said he “deeply regretted” the pain suffered by investors who have seen shares in the business virtually halve in the past year, with Centrica being the worst performer in the Footsie index.

Maybe the divi, which the Centrica boss says he anticipates being able to manage and maintain over the next three years price cap or no price cap, is the income quid pro quo for the bloodshed in the stock price.