After registering significant financial losses so far in 2019, Centrica’s CEO Iain Conn has decided to step down from his post during what he has labelled “a natural time to hand over”.
The British energy firm, whose shares fell 10% in early morning trading, recorded a pre-tax loss of £446m ($543m) in the first six months of this year, compared with a £708m ($862m) profit over the same period last year.
Its consumer division’s profits, specifically, fell 44% to £240m ($303m), a reduction the company attributed to the government’s new 2019 price cap.
Meanwhile, Centrica’s business division said warm weather and outages at its nuclear power sites were to blame for its own fall in profits of 89% to £11m ($13m).
Mr Conn, who was last year awarded a 44% pay rise to £2.4m ($2.9m), said: “The most difficult thing has been the price cap coming in – it cost British Gas £300m ($365m) in profits this year,
“All the current price cap has done is actually delayed the issues rather than solve them, and I’m hoping a new fresh look by this new government may make changes.
“It’s always been said that the price cap is going to be temporary and we look forward to the day when it’s rolled back.
Who is Iain Conn?
Following a ten-year tenure on BP’s board, Mr Conn joined Centrica in 2014 with designs on altering the company’s strategy to offer more consumer-based services.
Over the past few years, the 57-year-old has set about selling various power plants and wind farms, as well as periodically slashing the company’s oil and gas business.
Whether or not his approach has worked is another matter, however, as his company lost 742,000 customers and laid off 4,000 staff last year alone.
“We are finishing the journey to becoming a customer-facing energy and solution company,” said Mr Conn, speaking on the BBC’s Today programme on 30th July.
“Once we have done that, it is the right time for me to hand over to a successor – a natural moment – we have been shifting a company to one in tune with a lower carbon economy.
“We grew consumer accounts in the first half of the year in the UK – we did lose 178,000 energy accounts, but we more than made up for it in the accounts in the other businesses.
“What seems to be happening is when we get close to being in the top five on a price comparison website, people prefer us.
“We are bundling energy with services and we make money out of both – it’s early days, but I’m very encouraged by what’s happened in the first half of the year.”
‘Last chance saloon’ for Centrica?
GMB, a UK energy union with more than 631,000 members, has said Centrica has arrived in “last chance saloon” following the news that Mr Conn would be stepping down after the company’s poor 2019 financial performance.
“Centrica’s calamitous financial results come as no surprise to GMB and the announcement to cut another £250m ($305m) and slash yet more jobs is not the answer – you cannot just cut your way out of crisis,” said its national secretary Justin Bowden.
“Neither is the solution secretly touting Centrica’s wares in some sort of middle and far eastern bring and buy sale. You have to have a plan, you have to grow.
“British Gas is a household name with the competitive advantage that that should bring – there is a brilliant workforce who are desperate for a future and are hurting.
“More of the same – more job cuts on top of the thousands already gone and going – are panic measures not a credible plan for recovery – there must be a pause under a new CEO, investment and a new plan for growth.
“The havoc the government’s cap continues to wreak on British jobs across the UK’s traditional energy supply businesses and the unusually warm weather and outages in the nuclear business have not helped, but they are only a small part of the story.
“The real reasons for Centrica’s demise are a series of poor management decisions and an arrogant refusal to face up in time to the changing world of competition.
“British Gas has to stop haemorrhaging customers and rewarding boardroom failure, it has to change the flawed hard sell business model that contributed to the mess that it’s in and reverse its bullying culture and urgently build a strategy around investment and growth, not cuts.
“Blessed with a loyal workforce, a top class brand and the biggest customer base in the country it now needs the right leadership and a properly implemented strategic vision.”
