British Gas owner warns that overhaul is just starting
THE OWNER of British Gas has warned its overhaul “has only just started” as profits at Centrica’s energy supply business slumped to a new all-time low.
British Gas Energy saw earnings tumble 35 per cent to £80m in 2020 after shedding another 164,000 customers and as it took a hit from the pandemic and warmer weather.
The wider Centrica group was left nursing a 31 per cent drop in underlying earnings to £447m after a £250m impact from Covid-19 on energy demand and customer defaults, which was only partially offset by cost-cutting.
On a statutory basis and excluding its offloaded US Direct Energy business, the group posted operating losses of £362m against £783m in 2019, weighed down by £1.6bn of charges as commodity prices fell.
Centrica chief executive Chris O’Shea said turnaround efforts “won’t be easy”, with more than 3,000 jobs gone by the end of 2020 under a cost-cutting plan that will see 5,000 roles axed.
He said further extensive staff cuts were not planned, stressing “the era of thousands of job losses every year is over”.
The group warned over the outlook as ongoing Covid-19 restrictions are set to keep energy demand under pressure and amid an ongoing bitter dispute with the GMB union over pay in its UK services business.
Mr O’Shea said: “We have made a good start to the turnaround of Centrica, with the sale of Direct Energy now complete and our significant group restructure on track.
“However, our journey to transform has only just started.
“It won’t be easy but I am confident we have the people, the brands and the market positions to deliver a successful turnaround in the coming years.”
The group also announced it was bringing forward its commitment to have net zero greenhouse gas emissions to 2045 – five years ahead of its previous target and the UK deadline – and vowed to help its customers become net zero by 2050.
The results showed earnings at its British Gas energy business was impacted as households used less energy in warmer weather conditions – a trend seen by the group over the past four to five years and put down to the impact of global warming.
This cost the division around £40m while it also set aside about £40m for customer defaults as it expects rising numbers of borrowers to struggle with bill payments due to the coronavirus crisis.