British Gas Business profits in the first half of 2015 have plummeted by 95% to just £3 million from £61 million last year after a new billing system caused billing issues, raising costs and hitting customer service levels.
Centrica said the delay to issuing customer bills resulted in an increased bad debt charge and additional costs occurred trying to resolve the issue, both affecting profits. Centrica said it is currently undertaking an extensive transition recovery programme, with continued investment, but that customers are now being served normally and all issues should have been resolved by the end of the year.
BGB owner, Centrica is now poised to move ahead with a major job cull as part of a new strategy to move away from its loss-making upstream gas and power businesses and focus on core customer-facing activities.
While it’s business arm has been struggling, British Gas residential energy supply reported that profits have virtually doubled, increasing by 99% to £528 million from £265 million in the first half of 2014, as a result of higher temperature-led energy use and lower policy costs.
This won’t prevent job losses though as 6,000 roles are expected to be phased out before the eventual creation of 2,000 leaving 4,000 employees out of work.
Centrica have announced plans for a raft of investments in its customer facing businesses totalling £1.5 billion over the next five years with a focus on energy supply, services, distributed energy and power, the connected home and energy trading.
“It’s the way the world is going. The company will capitalise on the increasing trend in supplying business energy customers with advanced efficiency services and will also adapt to the way its residential customers are shifting towards the use of integrated home technologies,” said chief executive Iain Conn.
This strategy should help strengthen the business although it will no doubt come under criticism for the effects it will have on current employees.
Perhaps with these cost-cutting measures, British Gas will be able to make further price cuts for domestic customers?