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Direct Energy's Increased Scale Offsetting Lower Margins Direct Energy yesterday announced operating profit of $255 million for the first six months of 2013.
When reviewing the results in British pounds (ignoring the impact of currency conversion), Direct Energy adjusted operating profits for the first half of the year were up 6% versus the 2012 first-half results.
Parent Centrica said that Direct Energy is benefiting from enhanced scale downstream, offsetting pressure on margins from rising commodity prices.
"Rising gas and power prices in North America have led to some narrowing of margins in both residential and business energy supply, but over time this should benefit our upstream activities," Centrica said.
Direct Energy's Residential business saw gross revenue and operating profit broadly flat at $2.024 billion and $154 million, respectively, reflecting improved volumes and margins in the U.S. North and Alberta, offset by some narrowing margins in the Texas market. In terms of British pounds, Direct Energy Residential operating profit was down 2% versus the year-ago.
"[W]e continue to deliver profit growth in the US North East, as we benefit from organic growth and the full year effect of the NYSEG Solutions and Energetix acquisition," Centrica said of Direct's residential business.
Direct Energy's residential energy supply customer count was down slightly versus the total as of December 31, 2012 (but up versus June 30, 2012). Direct Energy's residential energy supply customer count was 3.397 million as of June 30, 2013, versus 3.455 million as of December 31, 2012 and 3.240 million as of June 30, 2012.
Direct Energy Business gross revenue increased 21 percent to $2.484 billion, reflecting volume growth and the impact of higher wholesale commodity prices on retail prices. Direct Energy Business operating profit increased to $82 million from $68 million (up 23% in British pounds).
Direct Energy Business saw a 17% increase in total electricity volumes, at 28 TWh for the six months ended June 30, 2013.
In the aggregate, Direct Energy saw first-half total revenue increase to $4.931 billion from $4.371 billion for the same period in 2012, reflecting volume growth and higher wholesale prices.
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August 1, 2013
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Copyright 2010-13 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com
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