UK utility Centrica accelerates cost-cutting drive with 5,000 job losses

London — UK energy company Centrica said June 11 it would slash 5,000 jobs in a huge cost-cutting exercise designed to simplify its business model.

Over half of the redundancies are expected to come from management, with most of the cuts taking place in the second half of 2020 following consultation.

"Our complex business model hinders the delivery of our strategy and inhibits the relentless focus I want to give to our customers," said Centrica CEO Chris O'Shea.

O'Shea was previously Centrica's chief financial officer. He took over from Iain Conn three months ago.

"We have great people, strong brands that are trusted by millions and leading market positions, but the harsh reality is that we have lost over half of our earnings in recent years. Now we must bring focus by modernizing and simplifying the way we do business," he said.

Centrica is to have fewer business units and all will report directly to the CEO. Three senior management layers are being removed and half of the current 40-strong Senior Leadership Team will leave by the end of August.

Centrica said the changes would accelerate cost savings. It had planned to strip GBP2 billion ($2.54 billion) from the business by 2022.

Alongside the restructuring, Centrica is starting a consultation to simplify terms and conditions for remaining employees in the UK. The group currently has over 80 different employee contracts.

Royal Bank of Canada analyst John Musk said he expected the Home Solutions segment and the SME portion of Centrica Business to be folded back into a British Gas segment, to focus on energy and services to UK consumers.

Larger commercial customers in Centrica Business would then be moved into Centrica Business Solutions.

The North American business would remain largely unchanged and split across Home and Business.

While no new divestments were announced, "our view is that the North American operations could eventually be sold off as well," Musk said.