Centrica cuts off 4,000 jobs

BRITISH Gas owner Centrica is cutting a further 4,000 jobs as it steps up an efficiency drive to combat political intervention and increased competition in the energy market after a 17 per cent drop in annual profit.

Chief executive Iain Conn said he “deeply regretted” its poor stock market performance – down 40 per cent over the past year – as a range of factors caused “material uncertainty” for investors. He also blamed falling profits at its business divisions in the UK and North America for its “weak” results, with both hit by warm weather and squeezed margins from competition.

The number of British Gas accounts fell by 10 per cent to 12.8 million from the previous year, amounting to about 750,000 customers as it supplies many households with gas and electricity. Adjusted operating profit fell 17 per cent to £1.25billion on 3 per cent higher revenue of £28billion, but shares rose 10p to 142¼p as it expects to maintain its current level of dividend payout to 2020. Centrica is also looking to offload its 20 per cent investment in UK nuclear reactors.

The latest job cuts, part of a plan to increase annual savings by £500million to £1.25billion by 2020, will mean Centrica has shed 9,500 jobs over six years – about a quarter of its workforce. About 1,000 will go this year, saving £200million. It expects to create 1,000 new roles.

The Government has proposed that a cap should be placed on suppliers’ most expensive tariffs, but Conn, pictured, argued that price controls in competitive energy markets are “not good for customers and evidence shows that where they have been introduced have led to reduced competition and less choice”.

He said: “Political and regulatory intervention in the UK energy market, concerns over the loss of UK customers and the performance issue in North America have created material uncertainty around Centrica and this resulted in a very poor shareholder experience. We regret this deeply and I am determined to restore shareholder value and confidence.”

Neil Wilson, senior market analyst at ETX Capital, said: “Management has to find a way to staunch customer losses, which seem to be getting worse. Competition is fierce as smaller players take on the Big Six. Extra focus on financial discipline is welcome but the question is whether Conn and Co have more in mind to fix Centrica than wielding an axe to costs.”