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British Gas owners Centrica to axe thousands of jobs as energy giant cuts workforce by 10 per cent British Gas owners Centrica to axe thousands of jobs as energy giant cuts workforce by 10 per cent
(35 minutes later)
Gas giant Centrica is to axe thousands of jobs after a strategic review which will see its workforce cut by 10 per cent. British Gas owner Centrica is axing up to 6000 jobs despite reporting that profits were up 44 per cent to £656 million during the first half of 2015.
The owner of British Gas said it will reduce its headcount by 6,000 across the group, not all in the UK. Profits were boosted by higher household gas usage because of colder weather and the falling price of wholesale gas. Centrica nonetheless decided to slash its interim dividend by 30 per cent and aim to cut costs by £750 million in the next five years.
The company will create 2,000 other jobs, so the net effect will be 4,000 job losses. Some of those made redundant will be reshuffled to other parts of the business as Centica looks to change its business focus from producing oil and gas to energy supply and services. In a statement, Centrica said it expected the eventual reduction in staff to be around 4000.
British Gas 's operating profit was up by 44 per cent, according to today's interim first half results from the group, which was larger than expected. Iain Conn, the new chief executive said that Centrica was already an energy and services company. “Serving our customers is waht we are known for, what we are good at and where we already have distinctive positions and capabilities,” Conn said.
The company said this was because of a colder year compared to 2014, with consumption up by 11 per cent. He explained that the stronger balance sheet was preparation to reposition Centrica as competitive against emerging long term trends, such as its exposure to fluctuating commodity prices.
The company said half the jobs lost would be through redundancies. Graham Taylor, an analyst at Moody's, said that this new strategy was not without risks. “The plan carries significant execution risk, particularly around the ambitious cost-saving programme, planned investment in new areas including “connected home” technologies and distributed generation, and potential asset sales. But overall we see it as providing a foundation for improving credit quality,” he said.
In the first six months of 2015, profits at British Gas's residential arm rose to £528 million up from £265 million a year earlier. Lower energy prices also hit Centrica’s adjusted operating profit by 3 per cent at £1 billion.
Centrica's group adjusted operating profits fell 3 per cent to £1 billion.
Which? executive director, Richard Lloyd said: “While it's good to see the new commitment from Centrica to focus on serving customers, with British Gas profits high and wholesale prices low, customers will no doubt wonder why cuts to their bills haven't gone further, and haven't included electricity.
“The CMA (Competition and Markets Authority) has confirmed that household bills should be lower if the energy market was truly competitive.
“Following the CMA's blistering assessment of this sector, we expect big suppliers to pass on falling costs to their customers quickly and fairly.”
Ann Robinson, director of consumer policy at uSwitch.com, said: “The news that British Gas is predicting a surge in profits will be a hard pill to swallow for its customers, especially as so many went cold last winter to cope with sky-high bills.
“Wholesale prices, which make up around half of energy bills, have plunged to their lowest level in five years.
“Although British Gas is the only big six supplier to reduce gas prices twice this year, the fact remains that the combined cuts will lower its average dual fuel bill by just 6 per cent.”
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