UK Centrica cuts 5,000 Jobs
UK dominant retailer Centrica is restructuring and cutting 5,000 jobs, about half of which will come from management, it said June 11. The aim is to create "a simpler, leaner group focused on delivering for our customers," it said.
Centrica's share price has plummeted in the past few years, including regulatory changes to tariffs; fierce competition from new entrants to the retail market cutting into market share; and most recently the fall in energy demand caused by the lockdown. There is also a threat of bad debt as consumers struggle to pay bills. However the share price closed down on the day at about 40 pence each, less than half the price it was at the start of the year.
Changes are also being made to the board: the CEO of Centrica Consumer, Sarwjit Sambhi, and CEO of Centrica Business, Richard Hookway, will leave the company by the end of July. And Johnathan Ford is the new CFO with immediate effect.
Three management layers will be removed to create a flatter, less bureaucratic organisation which is closer to, and focused on, the customer. As a result of these changes, around half the 40 senior leadership team will leave by the end of August. The majority of the restructuring is expected to take place in the second half of 2020, following consultation on the proposals.
CEO Chris O’Shea said that in the months since his appointment he had "focused on navigating the company through the Covid-19 crisis and identifying what needs to change in Centrica." He concluded that its complex business model hinders the delivery of its strategy and relentless focus on customers. He said "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."
Regretting the redundancies, he said the changes would "arrest our decline, allow us to focus on our customers and create a sustainable company.”
Centrica has also announced changes to the board of its Irish subsidiary, Bord Gais: its managing director Catherine O'Kelly will take up a UK-based leadership role at Centrica. Dave Kirwan will take over a role he previously held, before a managing Centrica's UK home business.
The news comes shortly after BP announced a major restructuring to deal with the Covid-related recession and collapse in energy demand, the first consequence of which was the cutting of thousands of jobs, again including many management positions. Full details of the UK major's restructuring and its plans for a net zero carbon future are expected in mid-September.