Centrica has announced the loss of 4,000 jobs in the face of stiff competition and the looming price cap on energy tariffs. Conn said the group has achieved this target three years ahead of schedule but revealed it will now slash another 4,000 jobs, the majority of them in the United Kingdom, as it seeks to make £500 million of further cost savings over the next three years.
Centrica said the job losses, which are part of an extended cost-cutting programme, would fall mainly in its United Kingdom energy supply business.
Adjusted operating profits from Centrica's UK Home division accordingly fell by just 1 per cent year-on-year to £890 million, despite warmer weather and the introduction of the prepayment price cap.
Shares in Centrica (LON:CNA) have jumped in London this morning even as the British Gas owner posted a drop in profits due to weak performance at its Business energy supply unit, and particularly in North America.
The move comes after Centrica met its £750m per annum cost efficiency programme three years early.
Conn added that he is "determined to restore shareholder value and confidence". It expects to also create around 1,000 additional roles.More news: Team GB's James Woods narrowly misses out on bronze in slopestyle final
The announcement read, in regards to the United Kingdom market: "We will continue to engage constructively with the United Kingdom government and regulator, and are committed to achieving a customer-focused competitive market which innovates, delivers great service and choice, is efficient, keeps bills as low as possible and provides protection for the vulnerable".
"Our focus today is on performance delivery and financial discipline - on demonstrating top line growth as we deliver improved service and new propositions for our customers, and driving efficiency as hard as possible to underpin our competitiveness". A year ago saw hundreds of thousands of customers leaving British Gas business due to tariff rolloff on several products, with no alternative offering to customers.
The firm has expanded its total cost savings target to £500mn (US$693.7mn), which it aims to cut by 2020.
Around 4.5 million of Centrica's customers - about 60% - were on SVTs at the time of the announcement, with 70% of profits coming from the SVT customer base.
In its results report, Centrica said: "We believe that price controls in competitive energy markets are not good for customers and evidence shows that where they have been introduced in other markets they have led to reduced competition, less choice, and prices that tend to cluster around the cap".