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Business News

Npower's owner slashes jobs while British Gas owner warns on profits

The German owner of British power giant Npower is slashing one in 10 jobs across Europe by 2016 as part of a fresh wave of "efficiency measures", although it refused to be drawn on how many UK employees could be pushed out of work.

In a shareholder letter sent yesterday, RWE's chief executive Peter Terium announced that 6,750 jobs out of the total workforce of around 67,000 will go.

He said: "We will step up our efficiency measures significantly. By 2017, this will contribute an additional €1bn (£839m) of savings."

He said the move would help the company deal with low wholesale prices for energy and an increase in renewable capacity. RWE has been hit by the transition to renewable energy in Germany, where feed-ins from solar and wind are replacing power from fossil fuel power stations.

RWE has already made widespread jobs cuts and yesterday's announcement means it will have lost 18 per cent of its workforce by 2016, bringing the total number of job losses since 2011 to about 13,000. It also said it could not rule out further job cuts after 2016.

Npower employs nearly 10,000 UK staff but the group declined to reveal the number of cuts in Britain. However, rumours persist that 2,000 British-based call centre jobs will be outsourced to India.

Meanwhile, British Gas owner Centrica warned profits will be lower than expected this year even though the firm is hitting 15 million customers with an average 9.2 per cent bills hike next week.

Britain's biggest energy supplier said "challenges" in parts of its business, including power generation in the UK, the business energy-supply division in the US and UK and gas storage, will see adjusted earnings per share this year come in at a similar level to 2012.

The FTSE 100 company had guided the City to expect modest growth this year, with analysts pencilling in a 4 per cent rise in earnings.

Centrica claimed it had not seen a mass exodus of households leaving British Gas after its price hike announcement, reporting the number of residential energy customers was 15.7 million at the end of October, "broadly unchanged since the half year". But many would-be switchers have been waiting until all Big Six energy suppliers announce their price rises.

Centrica conceded it was facing "unprecedented times", with public debate over rising bills clashing with increasing green costs.

Last week Sam Laidlaw, the chief executive of Centrica, said he had decided not to take his bonus for this year amid public anger about soaring energy bills.