February 22, 2018 / 10:17 AM / a month ago

British Gas owner Centrica steps up cuts after profits fall

(Reuters) - Centrica stepped up plans for job cuts and cost savings on Thursday after the owner of energy supplier British Gas reported a 17 percent fall in annual operating profit.

FILE PHOTO: A British Gas van is seen parked outside a home in Loughborough, central England October 17, 2013. REUTERS/Darren Staples/File Photo

It plans to cut 4,000 jobs and see annual cost savings of 1.25 billion pounds ($1.74 billion) by 2020, up from a previous target of 750 million.

The company said it would cut about 1,000 jobs on a like-for-like basis in 2018 and save about 200 million pounds. The planned job cuts come atop some 5,500 jobs shed since the start of 2016.

Centrica also said it aims to divest its 20 percent stake in the entity which operates the UK’s 15 operating nuclear reactors by the end of 2020, but analysts warned it might not be easy to find a buyer.

“They have given themselves until 2020 to divest which suggests it’s not going to be the easiest sell in the world. I can’t imagine there will be a long list of buyers,” said Peter Atherton, an associate at consultancy Cornwall Insight.


Centrica reported a 17 percent fall in 2017 adjusted operating profit to 1.25 billion pounds on revenue up 3 percent to 28.0 billion. In November it had warned of lower-than-expected full-year earnings citing its North American and British businesses.

It saw a 6.6. percent fall in consumer energy supply customer accounts to 24.4 million, while business accounts fell 5.9 percent to 1.3 million.

British Gas raised its standard electricity tariff by 12.5 percent in September despite sliding customer numbers.

“Its been a grim 2017 for Centrica but this was flagged in November so it hasn’t been a surprise,” Atherton said.

Shares in the company were up 4 percent at 0955 GMT at 137.55 pence.

“The combination of political and regulatory intervention in the UK energy market, concerns over the loss of energy customers in the UK, and the performance issue in North America have created material uncertainty around Centrica... We regret this deeply,” CEO Iain Conn said in a statement.

Top energy suppliers British Gas, SSE, E.ON, EDF Energy, Innogy’s Npower and Iberdrola’s Scottish Power face pressure from smaller rivals offering cheaper deals.

Reporting by Arathy S Nair in Bengaluru; additional reporting by Susanna Twidale in London; editing by Sunil Nair and Jason Neely

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