Npower confirms it is cutting 2,400 jobs

Npower lost 351,000 customers in 2015

Npower is to cut thousands of jobs after reporting an annual loss of €137 million (£106 million) compared to a profit of €227 million in 2014.

The German-owned company said its 11,500 employees will be reduced by 2,400, through a mix of those who work directly and indirectly for npower.

Its owner RWE earlier announced a loss of €637 million (£492 million) in 2015, compared with a profit of €2.2 billion in 2014. 

Npower lost 351,000 customers, or more than 6 per cent of its UK energy customers, in 2015.

It said in a statement it will make "extensive cost savings to help turn around the significant losses made in 2015 and return the company to profitability".

Paul Coffey, chief executive of RWE npower, said: "Npower results continue the trend seen earlier in 2015, but they are nonetheless extremely disappointing and we are starting a two-year process to fix them. 

"They show a business that tried to do too much, too soon, while not focusing enough on the fundamentals in a constantly changing market. This led to over-complicated processes and procedures resulting in unhappy customers, too many complaints and extra costs to put things right.

"These issues are not insurmountable. Over the past few months, we have looked at every part of npower, and over the next two years we're fundamentally changing how the company operates."

Npower warned that inaccurate bills would lead to additional problems in 2016.

In December, npower was ordered by the energy watchdog Ofgem to pay £26 million to customers for sending out inaccurate bills and not handling complaints correctly.

Professor David Elmes from Warwick Business School told the BBC that the job losses were the result of npower "returning to normal business" after it hired lots of extra staff to deal with billing issues last year.

"What we see here in the UK with Npower is a company that made some really quite serious mistakes in terms of implementing an IT system to bill customers, they ended up billing customers late or with the wrong information," Professor Elmes said. 

"They've put that behind them and that some of the job losses are related to getting back to normal business after they took on a lot of extra people to sort out the problem," he added.

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