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Direct Energy To Launch Own Smart Thermostat In First Half Of 2017, Full Rollout of Hive Connected Home Products

Centrica Reports Improved Unit Margins For North American Home Business, Reports Earnings

February 23, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Hive, Centrica's connected home brand, will see a "full launch" of its product range in North America during the first half of 2017, including the Hive smart thermostat, Centrica said in reporting earnings today

Centrica's North American Home energy supply customer count was 2.897 million as of December 31, 2016, versus 3.040 million as of June 30, 2016 and 3.033 million a year ago

Including Centrica's North American home services business, the aggregate North American Home customer count (supply and services) was down 7% year-over-year at 3.769 million customers, as the business focused on more valuable customer segments.

Regarding the North American Home business, Centrica said, "We remain focused on continuing to improve the sustainability of the business through offer differentiation and innovative customer propositions. This includes the bundling of products, with 21% of energy sales being bundled with one or more other products, such as a protection plan or smart thermostat. In November, we launched bundled energy and Hive connected home tariffs in Texas, the US North East and Alberta, and a full launch is planned in H1 2017."

EnergyChoiceMatters.com was the first to report Direct Energy's initial rollout of certain Hive services last fall (see story here)

Also concerning the North American Home business, Centrica said, "We are also looking to expand into new geographies as opportunities open up and during the year we started providing energy in New Hampshire and Rhode Island, while we opened 78 new services franchise territories. Energy customer retention improved by 3ppt, however the total number of energy supply customer accounts fell by 136,000 in 2016, reflecting our decisions to stop door-to-door sales in Texas and wind-down our customer base in Ontario, as we focus on the higher value customer segments and regions."

Adjusted operating profit for the North American Home segment was up 21% for the full year 2016, at £93 million versus £77 million a year ago, reflecting improved unit margins in energy resulting from a focus on customer value and growth in the company's annuity business

Centrica's North American Business customer count was 590,000 as of December 31, 2016, versus 597,000 as of both June 30, 2016, and a year ago. North American Business customer usage for the full year 2016 was 90,535 GWh for electricity and 5,827 mmth for natural gas

Adjusted operating profit for the North American Business segment was down 10% at £221 million versus £246 million a year ago

Full-year earnings for North America was impacted by warm weather in the first half of the year. Centrica said that H2 2016 adjusted operating profit for North America was significantly higher than both H1 2016 and H2 2015, with the realization of higher B2B forward net margin under contract, improved solar performance and cost efficiencies.

Centrica reported that in late 2016 it simplified its services business with the divestment of two small "non-core" businesses, Airco Mechanical in the U.S. and Airtron Canada

The disposal of Centrica's investment in Airco Mechanical Ltd. was accomplished through a management buyout for consideration of $10 million (£8 million), out of which $3 million (£2 million) is deferred for payment on 1 December 2017. A loss on disposal after tax of $11 million (£9 million) was recognized as an exceptional item.

Centrica disposed of its interest in Airtron Canada for consideration of C$5 million (£3 million). Of the consideration, C$4 million was received upon completion of the transaction and C$1 million is deferred for payment 18 months post completion. A loss on disposal after tax of C$19 million (£12 million) was recognized as an exceptional item

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