British Gas to cut more jobs than planned

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The Independent Online
BRITISH GAS has shed further jobs in the first three months of the year and will reduce its workforce by more than the 4,400 signalled at the end of last year.

Philip Rogerson, finance director, declined to say how many jobs would go in total. The company has set aside pounds 32m to pay for severance costs, adding to last year's pounds 145m provision for restructuring and relocation.

The severance costs held back profits growth to 3.5 per cent in the first quarter, when pre-tax profits were pounds 965m. Turnover was pounds 3.6bn and earnings per share were 15.1p.

The result was also affected by tightening regulation, which cost pounds 75m. The company is awaiting the results of a Monopolies and Mergers Commission investigation that could lead to its break-up.

It has already had to cut prices and lose market share as part of a programme to introduce more competition into the gas market.

Borrowings fell from pounds 4.25bn in December to pounds 3.9bn in March but this was pounds 811m higher than a year earlier.

Capital spending is running at about the same rate as last year when the company spent pounds 2bn. Mr Rogerson said: 'The outcome of the MMC inquiry will cause us to review our capital spending.'

British Gas's shares rose 1.5p to 295p. They have recently recovered ground lost earlier in the year and are now at the same level, relative to the rest of the stock market, as they were when the MMC inquiry was announced. This reflects growing confidence that the results of the inquiry will not be as damaging as once feared.

British Gas has plans to break itself into seven units, even if the MMC does not force it to make the splits. It is understood that as part of this plan it might sell its high street showrooms.

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