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Iain ConnImage copyright
PA Media

British Gas owner Centrica’s chief executive Iain Conn is to step down from his post and retire from the company’s board next year.

He told the Today programme it was “a natural time for me to hand over”.

Centrica reported a pre-tax loss of £446m in the six months to June. It made a £704m profit this time in 2018.

The firm is also cutting its dividend and selling its investment in oil and gas exploration and production, but is launching a new partnership with Ford.

Price cap impact

Profit at the company’s consumer division, which includes British Gas, was down 44% to £240m.

It said the decline reflected the impact of the government’s price cap, which was brought in at the start of 2019.

Profit at Centrica’s business division fell 89% to £11m, which it blamed on warm weather and outages at its nuclear power stations.

The company’s shares fell by 19%.

Mr Conn said: “The most difficult thing has been the price cap coming in. It cost British Gas £300m in profits this year,

“All the current price cap has done is actually delayed the issues rather than solve them, and I’m hoping a new fresh look by this new government may make changes.

“It’s always been said that the price cap is going to be temporary and we look forward to the day when it’s rolled back.”

He added: “We are finishing the journey to becoming a customer-facing energy and solution company. Once we have done that, it is the right time for me to hand over to a successor – a natural moment.

“We have been shifting a company to one in tune with a lower carbon economy.

“We grew consumer accounts in the first half of the year in the UK. We did lose 178,000 energy accounts, but we more than made up for it in the accounts in the other businesses.

“What seems to be happening is when we get close to being in the top five on a price comparison website, people prefer us

“We are bundling energy with services and we make money out of both. It’s early days, but I’m very encouraged by what’s happened in the first half of the year.”

Last year, Mr Conn was given a 44% rise in his pay to £2.4m.

Investors love companies with big market shares in industries where competitors find it hard to secure a foothold – and a decade ago that was Centrica.

Through British Gas it had a one-fifth share of the British household energy market, where competition was limited, and a fast-growing business in America.

A previous flourishing of competition among energy retailers had been killed off when wholesale prices had risen quickly.

But those market dynamics have now been tipped on their head.

New technology and new government regulations have made it much easier for people to change their supplier, and generating power has proved to be a marginal and often loss-making game.

Ian Conn arrived just as this new reality was dawning, and there were much greater headwinds awaiting.

Theresa May’s cap on energy prices has cut about £300m off its annual retail profits, and nimble competitors have eaten away at its cosy retail dominance.

Mr Conn has raced to try and keep up, but those once loyal shareholders have always been ahead of him. The share price was north of 300p when he joined – now it is just 81p.

Before his departure he has made the final big steps in the step away from capital-intensive power-generation assets, putting both the nuclear power and oil and gas interests up for sale.

It will be up to his successor to convince markets that this strategy is the right one.

‘Right leadership needed’

GMB union national secretary Justin Bowden said Mr Conn was leaving Centrica “in the last chance saloon”.

British Gas lost 742,000 customers last year and Mr Bowden added: “British Gas has to stop haemorrhaging customers and rewarding boardroom failure.

“Blessed with a loyal workforce, a top-class brand and the biggest customer base in the country it now needs the right leadership and a properly implemented strategic vision.”

Centrica also announced it was launching a partnership with Ford, as the carmaker seeks to expand its range of electric vehicles.

Under the deal, Centrica will deliver a dedicated home charging installation service for the next five years.

There will be special electric vehicle tariffs from British Gas and Bord Gáis Energy, which will allow Ford customers to benefit from lower energy prices for overnight charging.