Centrica blames political intervention and loss of customers for profits fall

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Energy supplier Centrica, which issued a profit warning in November, has today raised its cost savings target by £500m and said it would cut about 4,000 jobs by 2020.

Centrica updated investors on its full-year performance this morning, posting a 17-percent drop in adjusted operating profit to £1.25 billion, reflecting "significantly reduced profit" from its Business unit.

Britain's biggest energy supplier said that profits from its core United Kingdom household supply arm actually rose by 3 per cent to £572 million past year, despite it having lost 1.4 million customer accounts.

The number of household customer accounts for both home services and energy supply plunged by 1.725 million - or 7 per cent - to 24.4 million.

The energy supplier - which has operations in North America, Ireland and the UK- said it was chasing savings of £1.25bn per year by 2020. It lost 23% of its I&C customer base and 5% of SME customers.

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Centrica's group chief executive Iain Conn described the firm's financial results in the second half of past year as "weak", and said that political intervention in the United Kingdom energy market was a major factor. Its market share is also shrinking because of new competition from smaller suppliers. Most of the job cuts are expected to be in the UK. "We're not in a blame game here".

British Gas is withdrawing its standard variable tariff (SVT) from the market at the end of March.

Centrica said it expects to reduce about 1,000 jobs on a like-for-like basis in 2018 and save about 200 million pounds.

HVP reached out to British Gas for more information, but the company declined to comment further. "That means others are going to hurt first and more than us as long as we maintain that competitive position". Conn said the group is looking at the possibility of selling to infrastructure funds, given the limited pool of potential buyers within the nuclear sector itself.

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