Electricity company cuts 700 jobs: Lower manpower costs help Northern Ireland Electricity to lift profits by 27%

NORTHERN Ireland Electricity has cut more than 500 jobs in its core business since it was privatised last June and will reduce the workforce by a further 200 over the next two years. Reductions in manpower costs and recovery in the local economy helped the company to increase pre-tax profits last year by 27.6 per cent to pounds 74.9m.

Sir Desmond Lorimer, chairman, said NIE had benefited from higher housing starts, lower unemployment and improved inward investment. 'The factors all appear to be right for continued progress in the company,' he said.

NIE's turnover rose 6.3 per cent to pounds 481.9m in the year to 31 March and earnings per share grew by 32 per cent from a pro forma 27.8p to 36.7p. The total dividend for the year is 11.39p, an increase of 13.7 per cent. The company said that it would maintain a progressive dividend policy that served the interests of shareholders. NIE's share price fell by 19p to close at 222p.

Electricity sales grew strongly during the year, particularly to industrial customers. Patrick Haran, chief executive, said he was sensitive to complaints by some customers that electricity prices in Northern Ireland were too high.

Domestic tariffs were increased by 6.6 per cent last year because of a rise in fuel prices. The company has announced a reduction in bills in the current year of 1.3 per cent, which will be the first decrease for many years in its electricity bills.

Industrial prices have also been a cause for concern. A report due to be published by the industry watchdog, Offer, is expected to show that industrial electricity prices are between 5 and 10 per cent higher in Northern Ireland than in other parts of the UK.

NIE's retail operation made an operating profit of pounds 600,000 last year, following a loss of pounds 900,000 in the previous year. Dr Haren said that the company was in talks with the retail workforce over pay cuts of 20 per cent and the introduction of incentive payments. He said retail had to perform much more strongly to secure its future.

Sir Desmond is to retire as chairman following the annual general meeting in July. He will be succeeded by David Jefferies, chairman of the National Grid Company.

(Photograph omitted)