Direct Energy Delivers Substantial Operating Profit
Sustained Sales Growth and Operations Improvements and Efficiencies Lead to Solid Results
TORONTO, July 26, 2012 /CNW/ - Direct Energy, one of North America's largest competitive energy and energy-related services providers, today announced an operating profit for the first six months of 2012 of C$264 million. The company saw year-over-year revenue decrease from C$4.8 billion in 2011 to C$4.6 billion in 2012. Direct Energy is the North American subsidiary of Centrica plc (LSE: CNA). Centrica reported half-year 2012 revenues of £12.0 billion (C$18.9 billion) and earnings of £767 million (C$1.2 billion).
Direct Energy's profit was driven by sustained sales growth in the company's residential and business customer segments, particularly in the competitive retail markets in Texas and the U.S. Northeast, as well as improvements and efficiencies in its upstream and downstream operations. In addition, the recently completed upstream gas, home energy services and retail gas and power acquisitions helped improve sales growth and the company will be building on these acquisitions to deepen customer relationships by enhancing propositions to the customer through joining our services and energy products. The company experienced strong organic growth in customer numbers alongside higher levels of customer service, having entered several new markets through both the residential and business lines of business across North America since the start of 2012.
"Direct Energy delivered a solid first half, continuing to invest for growth across the business," said Chris Weston, President and CEO of Direct Energy. "Despite the challenges related to gas prices and mild weather during the first half of the year, the momentum gained from our recent acquisitions has provided further capacity for growth, operational improvements and cost efficiencies, which positions us well to deliver on our year-over-year profit growth targets."
First Half 2012 highlights from Direct Energy's lines of business include:
Direct Energy Residential
- Operating profit was C$160 million.
- U.S. Northeast customer numbers will increase to more than 1.3 million following organic growth in the region and the acquisition of Vectren Source and pending acquisitions of Energetix, Inc. and NYSEG Solutions, Inc.
- Continued strong operating profit performance from Texas which now includes the integration of First Choice Power and product innovations, which saw a 40 percent growth in "Power to Go" pre-paid product offering.
Direct Energy Business
- Operating profit was C$95 million.
- Delivered strong sales, particularly in the small business market segment.
- Electricity volumes up eight percent despite milder weather
Direct Energy Services
- Operating profit increased 38 percent to C$18 million
- Increased revenues across Clockwork Home Services brand by three percent in a challenging U.S. housing market.
- Expanded opportunity to offer protection plan products across the U.S. following the acquisition of Home Warranty of America (HWA), completed in March
Direct Energy Upstream
- Acquisition of Carrot Creek natural gas assets provides greater access to the multi-zone, liquids-rich deep basin gas and Cardium oil fairway in west-central Alberta
- Low gas prices during the period impacted returns from Direct Energy's upstream and wholesale business
- Alberta production volumes have increased five percent year-over-year while average unit costs are down 12 percent.
About Direct Energy
Direct Energy is one of North America's largest energy and energy-related services providers with more than six million residential and commercial customer relationships. Direct Energy provides customers with choice and support in managing their energy costs through a portfolio of innovative products and services. A subsidiary of Centrica plc (LSE: CNA), one of the world's leading integrated energy companies, Direct Energy operates in 46 states plus DC and 10 provinces in Canada. To learn more about Direct Energy, visit www.directenergy.com.
The results reported in British pounds are expressed in Canadian dollars (based on monthly average FX rates) except where noted. For reference average half year rates are: For 2012: £1 = C$1.5892; 2011: £1 = C$1.5782
SOURCE: Direct EnergyFor further information: