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In North America Residential Segment, Centrica Reports Higher Residential Adjusted Operating Profit From Cost Efficiencies, Offsetting "Minor" COVID Impacts
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Centrica, the parent of Direct Energy, reported interim results for the six months ending June 30, 2020
As reported in our related story today, Centrica announced that it has entered into an agreement to sell its North American energy supply, services, and trading business, Direct Energy, to NRG Energy, Inc. for $3.625 billion in cash (equivalent to approximately £2.85 billion) on a debt free, cash free basis (see story here)
North America Home Segment
In its North America Home segment (includes energy supply and services), Centrica reported that adjusted operating profit increased to $125 million for the first half of 2020, versus $100 million a year ago, "as cost efficiencies more than offset minor impacts from Covid-19 of a higher bad debt charge and lower services demand."
For the Energy Supply segment of the North America Home reporting unit, adjusted operating profit increased to $123 million for the first half of 2020, from $103 million a year ago
For the aggregate North America Home segment (supply and services), adjusted gross margin was $352 million for the first half of 2020, versus $398 million a year ago
The North America Home Energy Supply segment saw a loss of 41,000 customers from December 31, 2019 to June 30, 2020, despite improved
retention, largely due to the loss of face-to-face sales channels, Centrica said. Centrica was serving 2.719 million North America Home Energy Supply customer accounts as of June 30, 2020.
A breakdown of Centrica's North America Home Energy Supply customer count is below:
North America Home services accounts as of June 30, 2020 were 599,000, versus 608,000 as of December 31, 2019, and 622,000 a year ago
North America Business Customer (C&I) Segment
For Centrica's North America Business Customer (C&I) segment, the adjusted operating loss for the first half of 2020 was $60 million, versus an adjusted operating loss of $19 million a year ago
For the North America Business Customer (C&I) segment, Centrica reported that underlying retail power margins improved, reflecting lower capacity market charges, and Centrica called the underlying gross margins "resilient."
"However, Covid-19 resulted in lower energy demand which required commodity hedges to be
unwound at a loss, and an increase in bad debt provisions," Centrica said of the North America Business Customer (C&I) segment
For the North America Business Customer (C&I) segment, adjusted gross margin for the first half of 2020 was $150 million, versus $200 million a year ago. The North America Business Customer (C&I) segment's power retail and wholesale adjusted gross margin was $60 million for the first half of 2020, up from $58 million a year ago. The North America Business Customer (C&I) segment's gas retail and wholesale adjusted gross margin was $90 million for the first half of 2020, down from $142 million a year ago.
The North America Business Customer (C&I) segment was serving 461,000 customer accounts as of June 30, 2020, versus 475,000 as of December 31, 2019, and 495,000 as of June 30, 2019. Centrica said that North America Business customer "sites" fell by 14,000 or 3%, "as we continue to focus our sales
and retention activity on higher value, higher consuming customers."
For the North America Business Customer segment, demand was 6% lower in gas
and 14% lower in electricity during the first half of 2020, which reflects reduced business activity due to Covid-19 lockdowns and
warmer weather, Centrica said
Specifically, electricity volumes for the North America Business Customer segment were 34,169 GWh for the first half of 2020, versus 39,681 GWh a year ago.
Gas volumes for the North America Business Customer segment were 3,974 mmth for the first half of 2020, versus 4,215 mmth a year ago.
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--- Centrica North America C&I Segment "Underlying" Retail Margins Improved, But Saw Wider Loss On COVID Demand & Bad Debt Impacts
--- Residential Customer Count Falls Due To Loss Of Face to Face Sales Channels
July 24, 2020
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Copyright 2010-20 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
Centrica
North America Home Energy Supply
Customer Account Holdings (In Thousands)
As of 6/30/19 12/31/19 6/30/20
Texas 643 627 607
Northeast 1,143 1,231 1,221
Canada 902 902 891
Total 2,688 2,760 2,719
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