BG parent Centrica to cut 6,000 jobs
30 July 2015
UK energy firm, Centrica plans to axe 6,000 jobs, cut gas exploration and sell off its wind farms under a restructuring programme ordered by its new boss and former BP executive, Iain Conn.
The move comes even as profits doubled at its British Gas residential power supply business in the first half of the year and the company lost 45,000 more customers to rivals along the way.
Conn promised Centrica would in future be more ''customer facing'' in its scaled down form.
According to commentators, the move seemed to have more to do with the financial markets, as the share price had taken a heavy beating.
''Alongside a major group-wide efficiency programme, this (new strategy) will underpin long-term shareholder value, as we target operating cash flow growth of 3-5% per year and deliver a progressive dividend policy,'' he said.
Conn added, he was hopeful of creating 2,000 new jobs in the energy services side which should reduce the overall scale of redundancies to 4,000, largely in the UK and mostly before end- 2017. This would represent around 10 per cent of the group's total.
According to commentators, the job shedding was part of a wider move to cut annual spending by £750 million by 2020, helped by a plan to cut in half exploration and production from 80 million barrels of oil equivalents to between 40 million and 50 million.
Some of those made redundant would be reshuffled to other parts of the business as Centica looked to change its business focus from producing oil and gas to energy supply and services.
The company said in a statement that it expected the eventual reduction in staff to be around 4,000.
Conn said that Centrica was already an energy and services company. ''Serving our customers is what we are known for, what we are good at and where we already have distinctive positions and capabilities,'' Conn said.
He added the stronger balance sheet would help reposition Centrica as competitive against emerging long term trends, such as its exposure to fluctuating commodity prices.
Graham Taylor, an analyst at Moody's, said that this new strategy was not without risks.
''The plan carries significant execution risk, particularly around the ambitious cost-saving programme, planned investment in new areas including ''connected home'' technologies and distributed generation, and potential asset sales, The Independent newspaper reported. But overall we see it as providing a foundation for improving credit quality,'' he said.