Centrica is to undertake another major round of cost cutting, planning to take £500m out of the business each year from now to 2020. The firm targets savings of £1.25bn in total and said like for like headcount will decrease by 4,000.
Preliminary results for the year ended 31 December show Centrica lost 10% of its UK customer base, or 1.4m accounts, though the company claimed about two thirds of these were low margin customers acquired via white labels or collective switches.
Operating profit collapsed 92% to £4m for Centrica’s UK business energy supply unit. It lost 23% of its I&C customer base and 5% of SME customers.
Centrica reiterated it is “focusing retention and acquisition activities on the higher value SME segments, continuing to build relationships with energy brokers and improving our customer portal facilities to allow them to manage their whole portfolio online”.
The company said that approach has “led to an increase in broker-led acquisitions, which should aid our commercial performance” with some recovery in gross margin anticipated in 2018.
While the SME business is less challenged, the company has stated previously it is not retrenching from the I&C market.
Overall, Centrica posted an adjusted operating profit of £1,252m for the year, down 17%.
See full announcement here.