Centrica raises cost savings target, to cut 4000 jobs by 2020

by Frankie Norman February 23, 2018, 3:30
Centrica raises cost savings target, to cut 4000 jobs by 2020

The total number of customer accounts at Centrica's United Kingdom home division, where it managed a 1 per cent rise to £819m, slumped by 6 per cent to around 20.3 million, while its United Kingdom business unit saw a 9 per cent drop to 653,000.

It blamed a number of factors for the move - including pointing the finger at the government's energy price cap.

The utility, which owns household energy supplier British Gas and Bord Gáis Energy, shocked the market in November saying its full-year adjusted earnings per share would be around 12.5 pence, against forecasts of 15 pence.

Looking ahead, the energy supplier emphasised a focus on "performance delivery and financial discipline" targeting some £500mln of additional "cost efficiency" and it has capped capital investments to no more than an average of £1.2bn per year.

Centrica, which lost a total of 1.4 million customer accounts previous year, is also looking to sell its stake in Britain's nuclear power stations by 2020.

British Gas, which supplies 7.8 million customers, shed 9 percent of its domestic customers in 2017.

Iain Conn told the BBC the job losses were also due to "intense" competition and customers using more digital services.

But axing 4,000 jobs, at least 2,000 in the United Kingdom, seems an increasingly desperate move to achieve such savings, and shore up investor confidence in future dividends.

Centrica's group chief executive Iain Conn said the job losses are part of cost cutting measures after 2017 profits fell 17 per cent.

Conn said British Gas is already less exposed than many competitors: "Relatively our [SVT] is already £41 below the average of the other large suppliers, and actually its £100 below some of the highest prices in the market".

Centrica refused to comment on how numerous job losses would come from its operations north of the Border, or how many staff are employed in Scotland.

"We will clearly be wanting to discuss all the details with the government. We hope it doesn't happen because we think that ultimately it will be bad for customers", he said.

The total number of customer accounts at its United Kingdom home division slumped 6% to around 20.3 million, while its United Kingdom business unit saw a 9% drop to 653,000.

Centrica said political meddling in the United Kingdom energy market had impacted its performance.

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