Direct Energy Profit Up 5% in 2012 as New President and CEO Appointed
Strong organic and acquisitive customer growth and continued operational
efficiencies drive positive results
HOUSTON, Feb. 27, 2013 /CNW/ - Direct Energy, North America's largest
competitive energy and energy-related services company, today announced an
operating profit of US$526 million (C$526 million, £331 million) for the full
year 2012. Direct Energy is the North American subsidiary of Centrica plc
(LSE: CNA). Centrica reported full year 2012 revenues of US$38.059 billion
(C$38.050 billion, £23.9 billion) with an operating profit of US$4.36 billion
(C$4.359 billion, £2.7 billion).
For the full year 2012, Direct Energy reported a 5% increase in profit from
US$500 million (C$493.7 million, £312 million) reported for the full year
2011, driven by operational efficiencies across business segments, including
the move of the company's North American headquarters to Houston.
Solid growth in residential and small business customers segments due in part
to the successful integrations of recently completed acquisitions in the U.S.
Northeast including Vectren Source and New York-based energy retailers
Energetix and NYSEG Solutions, helped offset the planned, gradual exit of the
Ontario business and an increasingly competitive commercial industrial
segment. Direct Energy's year-over-year revenue decreased 3% from US$9.841
billion (C$9.697 billion, £6.1 billion) in 2011 to $9.561 billion (C$9.558
billion, £6.0 billion) in 2012.
Chris Weston, President and CEO of Direct Energy, said: "We saw solid customer
gains in the U.S. Northeast region and home energy services segment throughout
2012. Although weakened economic conditions, the operating environment in
Ontario and low wholesale prices posed challenges to parts of the business, we
were able to achieve organic and acquisitive growth in many of our downstream
and upstream segments, and successfully implement operational efficiencies
across the business. We are well positioned to continue to build our company
to create scale, stability and value for our customers across North America."
Direct Energy also announced today that Chris Weston has been appointed
Managing Director of Centrica's international downstream business with
authority over British Gas and all of Direct Energy except its upstream gas
assets. Mr. Weston will relocate from Houston to the United Kingdom for his
Accordingly, current Direct Energy Upstream and Trading President, Badar Khan,
will succeed Mr. Weston as President and CEO of Direct Energy effective April
1. Mr. Khan joined Direct Energy in 2003 and has served in several roles at
Centrica and Direct Energy including Managing Director of British Gas
Business. He is a veteran of the North American retail energy markets having
been involved since 1999. His earlier career was spent in management
consulting with Deloitte Consulting and KPMG in the US and the UK. He holds an
engineering degree from the UK, and an MBA from the Wharton School. Mr. Khan
will report to Mr. Weston.
"Direct Energy has enjoyed significant success over the last three and a half
years as we have grown our lines of business and increased the company's
revenue and operating profit," said Weston. "I look forward to working with
Badar Khan as he takes on the role of running Direct Energy and increases our
presence among customers and within the industry in the future."
Full year 2012 highlights from Direct Energy's lines of business include:
Direct Energy Residential
-- Operating profit for the business was broadly flat at US$249
million (C$249 million).
-- U.S. customer numbers increased to 3.5 million following
organic growth and the successful integrations of Gateway
Energy and Vectren Source in addition to the acquisition of an
additional 245,000 residential and small business customers
from New York-based energy retailers Energetix and NYSEG
-- Continued expansion of residential customer base in Texas from
the successful integration of First Choice Power and sustained
success of "Power to Go" pre-paid product offering.
Direct Energy Business
-- Operating profit for the business increased 16% to US$205
million (C$205 million) from US$176.5 million (C$173.9 million)
-- The business enjoyed record sales in 2012 reinforcing continued
organic growth success.
-- Operating margin increased to 4.8% reflecting the positive
impact of operational efficiencies achieved in competitive
-- Sales channel optimization and headroom in key markets are
driving the small business sector. The commercial and
industrial segment is increasingly competitive, however we are
holding market share through competitive price offerings.
Direct Energy Services
-- Operating profit increased 14% to US$51 million (C$51 million)
from US$44.8 million (C44.1 million) in 2011 following full
integration of Home Warranty of America (HWA), which provides a
platform for further opportunities for the cross-selling of
energy and services.
-- Contract relationships increased 5%, reflecting success of the
-- Sustained market share growth despite challenging economic
Direct Energy Upstream
-- Operating profit for the business was US$21 million (C$20
-- Successful integration of the producing natural gas weighted
assets in the Carrot Creek region of Alberta acquired from
Encana Corporation in December 2011.
-- In Texas, power generation volumes increased by 21% largely due
to good asset performance.
Notes: The results reported in British pounds are expressed in U.S. and
Canadian dollars (based on monthly average FX rates) except where noted. For
reference average full year rates are: For 2012: £1 = US$1.5896; 2011: £1 =
US$1.6103: 2012: £1 = C$1.5892; 2011: £1 = C$1.5855.
About Direct Energy
Direct Energy is one of North America's largest energy and energy-related
services providers with over 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 U.S. states plus the
District of Columbia and 10 provinces in Canada. To learn more about Direct
Energy, please visit www.directenergy.com.
Micah Hirschfield, Direct Energy, micah.hirschfield@directenergy,com, +1 713
877 3805; or Will Briganti, RLM Finsbury, email@example.com, +1
646 805 2034
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SOURCE: Direct Energy
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