British Gas owner Centrica is to sell off its US energy retail arm in a $3.6bn (£2.8 bn) deal as it seeks to revive its flagging fortunes and focus on its home markets in the UK and Ireland.
Direct Energy, which was bought by the British company in 2000 and is one of North America’s largest gas and electricity suppliers, will be sold to NRG Energy.
The group said the move, alongside a major shake-up of the business which will see the shedding of 5,000 jobs, will create “a simpler, leaner” company while bolstering its balance sheet.
Shares rose 20% in response to the news.
The announcement of the US sale, which is subject to shareholder and regulatory approval, came as Centrica revealed it had more than halved its pre-tax loss to £264m in the six months to 30 June, compared to £569m over the same period last year.
The country’s largest household energy supplier said it had lost 5% of its home energy customers, bringing it to around 5.2 million, in the face of stiff industry competition.
Sales opportunities were also limited as a result of a significant fall in customer visits during the coronavirus lockdown period.
Chief executive Chris O’Shea, who took over earlier this year, said: “Centrica delivered a resilient performance against the unprecedented backdrop of the COVID-19 crisis during the first half of the year.
“That is due to the response of colleagues across the group to keep our customers warm, safe and supplied with energy and services during the pandemic. I am truly grateful for their efforts.
“Our mission now is to turn around the company by putting customers at the heart of everything we do and creating a simpler, leaner, more modern and more sustainable company.
“The sale of Direct Energy is a fundamental step towards this, and although we have a lot more to do, we have the people, the brands and the market positions to deliver a successful turnaround.”
Stuart Lamont, investment manager at the financial planning firm Brewin Dolphin, said: “After a torrid 2019, it’s been a tough start to the year for Centrica – revenues and profits have dropped against a challenging economic and commodity backdrop.
“However, there are some positive steps in here for the longer term: the sale of Direct Energy, its North American energy business, is a significant move that will go some way towards simplifying Centrica and offsetting debt.
“The resumption of the sales process for Spirit Energy, its exploration and production arm, will likely do the same in time.
“With resilient cash flow and reduced debt, there are tentative signs of recovery in Centrica after a challenging few years – but there is also still plenty to do and it remains a work in progress.”