British Gas owner Centrica (CNA.L) has warned that growing numbers of customers falling behind with payments as household and business income is affected by the coronavirus pandemic could hit the group hard.
Centrica also said that plunging business energy use was already having a “more significant” impact as many businesses have temporarily closed their doors as part of government measures to prevent the spread of the coronavirus. This is despite increased demand for energy from UK households as people have been forced to stay at home.
The group has announced a pay freeze for non-customer facing staff as part of cost-cutting measures intended to bring costs down by around £400m ($496m) as it prepares for a hit from falling business energy demand and late payments from customers during the UK coronavirus lockdown.
As well as the pay freeze, Centrica is also postponing all employee cash bonuses, getting rid of its final shareholder dividend payout to shore up its finances, and terminating spending on non-essential projects.
It had already axed executive bonuses for 2019 earlier this year.
However, Centrica said it was “difficult to quantify” the impact on its earnings outlook, given the uncertainty over the length of the lockdown, customer behaviour, and economic effect of the coronavirus.
Several hundred Centrica service engineers across the UK have volunteered to carry out essential home visits to ensure energy supply is maintained for customers, despite the group halting non-essential customer visits to protect staff during the coronavirus pandemic.
Chris O’Shea, interim group chief executive at Centrica, said: “As the scale and length of the crisis unfolds, it is becoming increasingly clear what a vital role so many of the Centrica team perform to keep our communities warm, safe and supplied with energy.
“While there are so many uncertainties surrounding the impacts of this situation, I am confident that we have acted promptly and prudently to underpin the long-term strength of Centrica.”
Last month, Centrica’s two top bosses, chief executive Iain Conn and chairman Charles Berry resigned.
Berry had been on medical leave since the beginning of February, while Conn had already said he would step down this year, but the move left their successors to deal with the uncertain fallout of the coronavirus pandemic.