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After British Gas’s price drop a fortnight ago parent company Centrica (LON:CNA) today revealed it would axe 6,000 jobs and ditch US$7bn of its budget for investments.
The vast majority of the job losses will be British, according to reports, and half of the cull will come through redundancies planned through to 2017.
This is expected to deliver around £750mln of annual savings by 2020.
Centrica also said it intends to create 2,000 new jobs, and overall the group’s head count is expected to be about 10% lower.
The gas and electric utility group today revealed a 2% reduction in revenue for the first half of its financial year, to £15.4bn from £15.74bn, and operating profit fell 3% to £1bn.
The losses came from the group’s upstream activities, whereas ‘customer facing’ businesses like British Gas were more profitable than last year.
Indeed, British Gas was said to have benefited from increased gas consumption due to a cooler first half of 2015 and wholesale prices were also down in the period.
British Gas profits from residential customers doubled to £528mln, from £265mln, and across all of its business activities the British utility made 44% more profit, a total of £656mln.
Next month British Gas will reduce the price of gas for its household customers by 5%. It will be the second price drop this year, and according to Centrica customers will save an average of £72 per year.
At the time, British Gas denied the price cut was a response to a report from the UK competition watchdog, Competition and Markets Authority (CMA), which suggested customers ought to be encouraged to ‘shop around’ for best prices. The timing was coincidence, British Gas said.
Centrica was one of Thursday’s biggest fallers in the FTSE 100, losing around 3% to trade at 266.8p per share.