Yorkshire Electricity to cut 1,000 jobs: Final redundancy figure could be higher still as company prepares for new price formula
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Your support makes all the difference.YORKSHIRE Electricity is shedding a further 1,000 jobs over the next three years, but the final figure could be much higher, writes Russell Hotten.
The announcement does not include possible redundancies at its Homepower retail division, a loss- making joint venture with East Midlands Electricity that is to be sold or closed. Homepower employs 900 people at about 130 outlets.
The announcement of job losses accompanied a 4 per cent fall in Yorkshire's taxable profits to pounds 149m after charging pounds 43.5m for rationalisation and pounds 17.4m in provisions against the investment in Homepower. Pre-exceptional profits rose 22 per cent to pounds 202.8m. Shareholders get a 16.58p rise in the final dividend, making 23.48p for the year, a 15 per cent increase.
Yorkshire yesterday ended the electricity results season, and like other companies is cost-cutting in advance of the new price formula which is set to hit profits in the core distribution business.
Northern Ireland Electricity expects to shed more than 900 jobs by next March. East Midlands Electricity is cutting 700 and Western Electricity is to axe 130. Recession, reorganisation and poor investments have been blamed for hundreds of jobs lost by other electricity companies since privatisation three years ago.
John Tysoe, Yorkshire's chairman, said the 1,000 cuts, on top of 632 last year, would come from all areas of the business through a reduction in the number of operating sites and cuts in general overheads. He hoped to achieve the losses by voluntary redundancy.
Negotiations are under way to dispose of Homepower, formed in June 1993, but the operation is likely to be closed if it cannot be sold. 'It is our intention to exit from this business soon,' he said. Yorkshire has so far lost pounds 5m on the investment.
Mr Tysoe expects the new price formula being announced by the electricity watchdog Offer to be tough. But he would not talk about its impact on distribution profits, which rose 13 per cent to pounds 161.5m due to improvements in industrial and commercial trade. Yorkshire's dividend rise has been 15 per cent a year, but this is likely to end once the formula is enforced in 1995. Dividend cover rose to 3.4 times.
To counter the impact on its core businesses, Yorkshire wants to grow non-regulated operations such as gas and generation - which contributed 10 per cent to profits - to around 20 by the end of the decade. Profits in the supply business rose 84 per cent to pounds 20.6m because of tighter cost control and better debt collection.
Yorkshire has won a contract worth pounds 168m to help to run electricity supply in Stockholm. The city council has approved Yorkshire taking a 17.3 per cent stake in Stockholm Energi, which may float on the Swedish stock market.
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