Centrica to cut 1,500 jobs amid lower energy consumption, wholesale prices
British Gas owner Centrica said energy consumption has been lower than expected in the UK and North America so far in 2017 due to warmer than normal weather and that UK wholesale oil, gas and power prices have all fallen since it announced results in February.
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But even though UK home energy supply accounts were down 261,000 in the year to date the FTSE 100 company insisted it remained on track to achieve the 2017 targets set out in its results announcement, and has continued to make "good progress" on its cost efficiency programme, including cutting its headcount by around 1,500 during the year.
Centrica said its continued focus on improving performance and cutting costs would "help mitigate the negative impact of these changes in the external environment".
The company confirmed net debt was still expected to be in the range of £2.5-3.0bn, which it previously said would be enough to see the restoration of a progressive dividend.
Chief executive Iain Conn added that good progress was also being made in implementing his customer-facing strategy.
"Customer service is improving, we have launched new offers delivering choice for customers and rewarding loyalty and we continue to develop our technology capabilities. We remain on track to deliver against our 2017 targets.”
The company has begun building a new fast response distributed energy gas plant at Brigg and a new battery storage facility at Roosecote.
Exploration and production has been "broadly on plan" up until the end of April despite an extended maintenance outage at Morecambe as the Cygnus gas field has been performing ahead of expectations.
Shares in the company dipped very slightly in early trading but by 0930 BST on Monday were almost flat.
Analyst George Salmon at Hargreaves Lansdown said with lower energy consumption for Centrica's retail businesses, falling gas prices and another drop in customer numbers, "it’s easy to see the black clouds overhead" - especially with the Conservative party's trumpeting of more price regulation for the ‘big 6’ energy companies if they win the election.
"However, long-term investors will be familiar with the tricks the weather and energy prices can play on Centrica’s profits, and will already be aware that recent trends in customer growth have been negative. In this context, it’s good to see guidance remain unchanged, as progress against strategic targets continues apace," he said.
"Although customer numbers continue to fall, adopting a quality over quantity approach feels like the right thing to do, after all slashing prices to keep everyone on board can be a dangerous tactic. Investors will be hoping that with customer offers shifting to a more loyalty-based approach and service levels improving, the group can build a strong and stable base of valuable customers.”