Centrica, the owner of British Gas, will shed a further 4,000 jobs as part of a £1.2bn-a-year cost-cutting programme, which it blamed on the government’s energy price cap and fierce competition in the market.
Britain’s largest energy company reported operating profits down nearly a fifth to £1.25bn in 2017, owing to poor performance in its business energy supply and North America divisions.
“The only thing I regret is we are going to see 4,000 more colleagues leaving Centrica and it’s partly due to this price cap and competitive pressures,” said the chief executive, Iain Conn.
The majority of the 4,000 jobs lost will be in the UK, where 30,000 of its 35,000-strong global workforce are based. The first 1,000 will be cut this year, through natural attrition and compulsory redundancies, rising to a cumulative cut in headcount of 9,500 by 2020, to be partly offset by 2,000 new jobs.
Conn refused to rule out further job losses under the cost-cutting plan, which has now been increased by £500m annually.
British Gas lost about 750,000 customers over the year. However, Conn said the division was resilient and more than half of the lost customers were loss-making so the impact was limited. The company made a profit margin per customer of about 5%, or £59.
The government’s price cap will affect millions of British Gas customers by the end of this year, which Conn admitted would dent profit margins.
The company also faces a new energy force in the form of the merged npower and SSE, as well as new entrants with financial muscle such as Shell, which bought First Utility last year.
Conn said that despite these threats, he was confident things would get better, citing the company’s strategy, cashflows and balance sheet: “I don’t agree the worst is yet to come, I believe the best is yet to come.”
The company also announced it would sell its 20% stake in Britain’s existing nuclear power stations by 2020. “We are not a natural owner and it’s a minority stake with limited control,” said Conn, adding that buyers might include infrastructure funds.