Utility Week

UTILITY WEEK | 2ND - 8TH MARCH 2018 | 25 This week Centrica to cut 4,000 jobs as profits slump Company takes action to address customer exodus and imminent price cap Centrica has announced the loss of 4,000 jobs in the face of stiff competition and the looming price cap. Despite a 3 per cent increase in revenues to £28 billion, the group reported a 17 per cent fall in adjusted operating profit to £1,252 million in its preliminary financial results for 2017. Earnings before interest, tax, depreciation and amortisation (Ebitda) fell 9 per cent to £2,142 million and statutory operating profit was down four-fihs at £486 million. The number of household customer accounts for home services and energy supply plunged by 1.725 mil- lion – or 7 per cent – to 24.4 million. This included the loss of 1.4 million energy supply accounts, correspond- ing to 750,000 customers. Centrica chief executive Iain Conn said the fall partly reflected a deliberate attempt by the company to shed loss-making accounts, many of which were acquired as part of an unsuccessful attempt to later upsell. He said only 200,000 of the accounts were generating any profit. Adjusted operating profit from Centrica's UK Home division accordingly fell by just 1 per cent year on year to £890 million. The dip in group profit was instead blamed mainly on a "weak" performance in North America in 2017. The 4,000 job losses are part of measures that should reduce costs by a further £500 million over three years, following £750 million of cost reductions between 2015 and 2017. TG See analysis, p20 ENERGY Customers losses hit profits at ScotPower Scottish Power has seen its profit fall aer earnings halved at its retail arm in 2017, partly due to the loss of around 200,000 customers. Earnings before interest, tax, depreciation and amortisation (Ebitda) across its networks, renewables, generation and sup- ply businesses declined by more than 3 per cent to £1,215 million. Generation and supply posted a combined Ebitda of £121.9 million – a fall of more than 49 per cent on 2016. Supply earnings fell nearly 52 per cent to £98.5 million. Profit was also impacted by higher non-energy costs and warmer weather. The results were saved by a strong performance from Scot- tish Power Renewables, which grew Ebitda by almost 45 per cent to £316.1 million. ELECTRICITY Blackrock buys UK solar assets for £15m Asset management firm Black- rock has acquired 13.5MW of UK solar assets from China- owned CTF Solar for £15 million through its Kingfisher partner- ship with Lightsource BP. Blackrock Real Assets purchased Wormit Farm in Fife, Scotland (5MW); Stanton under Bardon Farm in Leicestershire, England (3.6MW); and Gretton in Winchcombe, Gloucestershire (4.9MW). The acquisition was made through Blackrock's Renewable Income UK Fund, and Light- source BP will be responsible for asset management and long- term maintenance of all three sites, which are supported under the Renewables Obligation at a rate of 1.3 Roc/MWh. ELECTRICITY TfL chooses Engie for solar rollout Engie has been chosen by Trans- port for London (TfL) to install solar panels and implement energy conservation measures across TfL's sites. The contract, awarded under the RE:FIT framework, will be delivered alongside London mayor Sadiq Khan's £34 mil- lion Energy for Londoners programme and builds on the existing partnership between the two organisations. Work is now under way to identify prime locations where solar power could help reduce energy costs, and the panels are expected to increase solar capacity across TfL by 1.1MW. The first phase, estimated at £5 million, will cover 24 loca- tions including depots, river piers, bus stations, train crew accommodation and the Acton Railway Engineering Workshop. Conn: plans in place Stock watch 270 260 250 240 230 220 DRAX SHARE PRICE, FIVE DAYS 30 Jan 6 Feb 13 Feb 20 Feb 27 Feb DRAX SHARE PRICE, ONE MONTH Drax shares saw a brief spike on Tuesday aer the company revealed a 64 per cent rise in earnings before interest, tax, depreciation and amortisation (Ebitda) to £229 million. The share price jumped nearly 14 per cent to 270p as trading opened, but had dropped back down to 245p as Utility Week went to press. The company also reported an operating loss of £117 million aer taking a £156 million write-down on the value of currency hedging contracts. 270 260 250 240 230 220 21 Feb 22 Feb 23 Feb 26 Feb 27 Feb Finance & Investment pence pence

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