British Gas owner Centrica cuts 6,000 jobs

media captionChief executive Iain Conn said the job cuts were ''a very difficult thing to do - I don't take this lightly at all''

Energy firm Centrica has said it will cut 6,000 jobs as it reported a doubling of profits at its British Gas business in the first half of the year.

The company said half of the job losses would go through redundancies. Most of the cuts are expected to be in the UK.

However, Centrica said it would also create jobs in growth areas, so the net loss in jobs will be 4,000 from the firm's current total of 37,500.

First half profits at British Gas's residential arm rose to £528m.

That was up from £265m a year earlier. Centrica group profits fell 3% to £1bn.

Centrica said the rise in profits at British Gas was due to higher gas consumption, which was triggered by the cold weather earlier this year compared with milder weather in the first half of 2014.

However, the strong performance at British Gas was offset by a collapse in profits at Centrica's oil and gas production division. Profits in this unit fell 78% to £116m as a result of lower oil prices.

Profits 'not excessive'

Centrica appointed Iain Conn as chief executive at the start of this year.

He has been conducting a strategic review of the business over the past five months, which has concluded Centrica should concentrate on the British Gas side of the business and reduce its activities in actual energy production, which takes major investment.

That is a less attractive business currently, as raw energy costs, such as oil, are around $50-60 a barrel, half the levels of last year.

Centrica said it was assuming the oil price would not move far from that for the foreseeable future.

Mr Conn denied the company was making excessive profits at British Gas.

British Gas cut prices by 5% earlier this year, and is due to cut gas prices by a further 5% next month, which the firm says will mean average savings of £72 a year.

Mr Conn said profits per customer would remain at the same level as in other years, at about £40-£65 a year.

image source, PA

Analysis: John Moylan, BBC industry correspondent

This is a major change in direction for one of Britain's most important energy firms.

In a world of $60-a-barrel oil, out goes the heavy investment of recent years in offshore oil and gas production.

Instead the company will refocus on its millions of customers, offering them new products and services. It sees a particular opportunity managing the needs of big commercial energy users.

The cost cutting goes further and faster than some expected. The majority of the 6,000 job losses will be in the UK, and 3,000 will go by the end of 2017.

Iain Conn told me that the move was necessary to become internationally efficient and to grow in the future.

But the doubling in profits at British Gas is likely to raise concerns, coming just weeks after a major competition probe concluded that the big six energy firms have been overcharging their customers for years.


Gary Smith, national officer of the GMB union, said: "This will be a day of deep concern across British Gas."

However, he added that the news was not all bad.

"What we do take from this announcement is a focus on the long term and investment in customer service which gives us room for optimism over front-line jobs."

He said that these were already being created, and were high quality posts. "This year, there are over 1,200 jobs being created for smart metering installers and in repairing and installing appliances.

"These are real jobs, skilled jobs and they are being filled by ex-military personnel, a lot of women and of course, young people."

British Gas supplies nine million households, meaning that it has more domestic customers than any of its rivals.

The energy sector has come under scrutiny by the Competitions and Markets Authority (CMA), which earlier this month said energy companies were collectively overcharging customers by £1bn a year.

Mr Conn disputed the figure, telling the BBC that it amounted to more than the profits of the entire industry.

Centrica also announced it would cut the interim dividend by 30%, a move that affects some 650,000 individual small shareholders.

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