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Centrica unveils plans to cut 5,000 jobs, reshuffles board to accelerate restructuring

The British Gas owner is also planning to reduce its senior leadership team by half to create a "flatter, less bureaucratic organisation"

Centrica PLC - Centrica unveils plans to cut 5,000 jobs, reshuffles board to accelerate restructuring

Centrica PLC (LON:CNA) said it is planning to cut 5,000 jobs and downsize its board through what it says is a “significant restructure” to streamline and simplify its business model.

The owner of British Gas said that it is aiming to have “fewer customer-facing business units all of which will report directly to the CEO” to make the firm flatter and less bureaucratic, and as a result, three management layers will be removed and its 40-strong senior leadership team will be reduced by half by the end of August.

READ: Centrica upgraded as Credit Suisse says coronavirus impacts now ‘priced in’

Over half of the 5,000 job cuts are expected to come from the removed management layers, Centrica said, adding that the majority of the restructuring is expected to take place in the second half of 2020.

The company also said that it had started a consultation to simplify terms and conditions for employees in the UK as part of an effort to “modernise” its employee agreements.

"Since becoming Chief Executive almost three months ago, I've focused on navigating the company through the [coronavirus] crisis and identifying what needs to change in Centrica…I believe that our complex business model hinders the delivery of our strategy and inhibits the relentless focus I want to give to our customers. We have great people, strong brands that are trusted by millions and leading market positions, but the harsh reality is that we have lost over half of our earnings in recent years. Now we must bring focus by modernising and simplifying the way we do business”, said Centrica chief executive Chris O'Shea.

“I truly regret that these difficult decisions will have to be made and understand the impact on the colleagues who will leave us. However, the changes we are proposing to make are designed to arrest our decline, allow us to focus on our customers and create a sustainable company", he added.

Board reshuffle

In a separate announcement, Centrica also said that as part of the restructuring, Sarwjit Sambhi CEO of its consumer business, and Richard Hookway, CEO of its business arm, will step down from Thursday and leave the firm by the end of July.

The company also announced that it had appointed Johnathan Ford, the former chief financial officer and chief operating officer of Homeserve PLC (LON:HSV), as its new CFO with immediate effect alongside Carol Arrowsmith as a non-executive director.

“I'd like to thank Sarwjit and Richard both for their service to Centrica and the support they have given me personally since being appointed Group CEO, and on behalf of everyone at Centrica, to wish them well in the future", O’Shea said.

"I am delighted that Johnathan is joining Centrica as Group CFO. He has a proven track record in driving growth and efficiency and has deep experience in Centrica's core in-home servicing business as well as experience of working in regulated industries. This is an important period as we continue to simplify our organisation and I am confident that Johnathan is the right addition to the executive team as we refocus the company on the customer and create long term value by returning Centrica to growth", he added.

Shares in Centrica fell 4.5% to 40p in mid-morning trading on Thursday.

Quick facts: Centrica PLC

Price: 45.95 GBX

LSE:CNA
Market: LSE
Market Cap: £2.68 billion
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