Yahoo Finance British Gas owner Centrica warns financial outlook is uncertain
The owner of British Gas has warned investors it has faced a difficult start to the year, weeks after sacking hundreds of its engineers through a controversial fire and rehire scheme to help turn the business around.
Centrica told its shareholders its financial outlook for the year was uncertain after the impact of the Covid-19 pandemic continued to drag on the business, which has struggled in recent years due to rising competition in the energy market.
In the first quarter of this year, demand for electricity was 15% lower than the year before among the company’s business customers, the company said in a trading update ahead of its annual shareholder meeting. Home boiler repairs and installations were 11% lower than the same time last year because non-essential home service visits were postponed to help prevent the spread of Covid-19.
The slump in home energy services was also due to a long-running series of strikes by thousands of its engineers in response to the company’s plan to toughen its employment contracts in an effort to boost productivity and become more competitive.
Under the fire and rehire plans, most of Centrica’s 20,000 staff were told to accept the new conditions, which would increase working hours for its engineers, or lose their jobs.
The company confirmed that 460 engineers were dismissed last month, as a result of what the GMB trade union has called “a dirty, bullying tactic”. A survey by the union found that more than three-quarters of the public believe that fire and rehire schemes should be made illegal.
Chris O’Shea, who became Centrica chief executive last year, said his plans to modernise the company remained on track and “the difficult, but necessary process to move colleagues on to new terms and conditions is now complete”.
“We are pleased that 98% of UK colleagues have accepted the new contracts which will enable us to better serve the needs of our customers. Although the external environment remains uncertain, our tight focus on cash and on fixing the basics across the group leaves us well placed as we continue the turnaround of our company,” O’Shea said.
O’Shea hopes to save £100m in operational costs this year as part of a plan to stem the steady decline of the FTSE 250 energy company in recent years. British Gas has lost about 3 million household energy customers in the last decade following an influx of successful new energy startups. Centrica crashed out of the FTSE 100 after losing more than 70% of its market value in the last five years.
