David Cheetham from XTB.com sums up the news that Npower is to cut 2400 jobs in the UK. “The announcement comes on the back of a challenging year for the firm that simultaneously posted a loss of £106 million for 2015. The latest earnings release compares unfavourably to a profit of £176 million for the prior year and these results, alongside the announcement of large-scale redundancies, highlight the difficulties faced by management at present as they attempt to stem the multi-year decline in stock price. Npower currently employs 11,500 people in the UK, with over half of these full time posts, so the reduction in its workforce represents a drop of approximately 20 per cent. Due to a failure to bill customers correctly and deal with complaints effectively, Ofgem has fined the ‘big six’ energy company a record £26 million, and disgruntled customers have voted with their feet with no fewer than 351,000 of them deciding to take their business elsewhere.
“Largely due to this poor level of customer service, which has seen the company consistently come bottom or second bottom of Ofgem’s ranking for complaints, the gas and electric supplier has slipped from second to sixth place in the list of UK energy suppliers. Rather unsurprisingly this has had a negative effect on the share price as can be seen by the slump in market value of parent company RWE. The stock has been trending lower since the 2008 financial crisis and the costcutting measures targeted at the UK segment of the business are intended to halt this decline which has seen more than half of the company’s value wiped off in the past 12 months.”