Thursday 30 July 2015

British Gas profits double, owner Centrica to axe 6,000 jobs

British Gas profits double, owner Centrica to axe 6,000 jobs

The owner of British Gas has announced plans to slash 6,000 jobs despite the Big Six supplier doubling its profits in the first half of this year.

Centrica said at least half of the job losses would be through redundancies by the end of 2017.

The announcement follows a five-month strategic review, which also revealed its operating profit was down 3% to £1 billion in the first six months of 2015.

Centrica plans to reduce the size of the more “capital intensive” exploration and production (E&P) and power businesses, with resources falling by around £1.5 billion by 2020.

The company added it will exit its remaining wind joint ventures, with the aim of divesting up to £1 billion of oil and wind assets by 2017.

Centrica however said nuclear energy is an “attractive investment and remains a useful source of baseload power” for its UK energy supply businesses.

“Moving forward we will therefore consider our interest in the UK nuclear fleet as a financial investment and will assess its merits in the portfolio on that basis”, it stated.

The company added its long term growth focus will be on energy supply, services, distributed energy and power and the connected home and energy marketing and trading. It has pledged to commit around £1.5 billion in the next five years to drive growth.

Centrica CEO Iain Conn said: “We see our customer-facing businesses as a real source of competitive advantage given our distinctive positions and capabilities and these businesses will be our focus areas for growth.”

British Gas

[caption id="attachment_102917" align="alignright" width="350"]Image: Thinkstock Image: Thinkstock[/caption]

The Big Six supplier saw its residential energy supply profits rise to £528 million in the first half of 2015 as a result of higher energy usage.

“With falling wholesale commodity prices and lower ECO environmental costs, predominantly reflecting the phasing of our expenditure on the programme, profitability nearly doubled compared to a weak 2014 figure”, the company stated.

Its business energy supply saw a £3 million profit, which was impacted by issues following the implementation of a new billing and Customer Relationship Management (CRM) system last year, resulting in “significant” delays to issuing customer bills.

“As a result, we incurred an increased bad debt charge and additional costs associated with extra resource required to help resolve the issues. Customer service levels also suffered and in a competitive environment the number of supply points fell by 6% in the first half. Reflecting all of this, the business only made a small profit in the first half of 2015, significantly lower than in the first half of 2014,” the report states.

The company however expects to resolve the billing issues by the end of 2015.

Earlier this month British Gas announced it would reduce its gas prices by 5% for householders.

Written by

Bruna Pinhoni

Trending Articles