Centrica to Cut 1,300 Jobs Amid Turnaround Efforts and Shifting Customer Behavior

Centrica, the parent company of British Gas, plans to reduce its workforce by 1,300 employees over the next two years as part of its ongoing transformation program. The energy firm announced it would cut an additional 800 positions, building on 500 job reductions made in the previous month.

The proposed cuts include approximately 500 roles within the customer operations team that involve direct contact and reductions in outsourced support jobs. Centrica stated that these changes are necessary due to a significant shift in customer behavior, with a 20% year-on-year decrease in average customer contact per person, and about 90% of customers now utilizing digital channels for interaction. The company has been managing its resource levels through natural attrition in response to these structural changes.

The overhaul of customer services is a key component of Centrica's broader 'transformation programme,' which also involves the targeted deployment of AI tools to enhance operational efficiency. The company also intends to streamline roles within its group support functions.

These job losses represent an approximately 14% reduction in Centrica's customer operations team. The company reported an 18% decrease in adjusted core profit for the first half of the year, ending June 30. This decline was primarily attributed to the disposal of Spirit Energy assets and production outages, compounded by warmer weather and weaker market conditions impacting profit margins.

Despite the financial pressures, Centrica increased its dividend by 9% to 2 pence per share. Chief Executive Chris O'Shea commented on the volatility in energy markets, acknowledging challenges in certain business areas and slower-than-desired delivery. He emphasized the company's continued disciplined investment to strengthen its portfolio and support long-term growth, aiming for more stable and predictable earnings. O'Shea stated that there is still significant work to be done to achieve ambitious long-term targets.

Centrica shares experienced a 2.6% decline, trading at 175 pence. The company acknowledged the recent announcement regarding the removal of VAT on household bills but reiterated its call for targeted support schemes for lower-income customers. Centrica also stressed the importance of Ofgem working closely with the government to ensure necessary policy and funding decisions are implemented.