“While no business is immune to the repercussions of an economic slowdown like the one we are experiencing at present, our investors can take comfort in Gaz Métro’s defensive attributes. The fact its core business, the distribution of natural gas, is closely tied to heating homes and businesses, provides it with a certain financial stability. During this turbulent period, Gaz Métro intends to stay the course, maintain its financial and operational discipline and continue to manage the funds entrusted to it by its investors with rigour”, said Sophie Brochu, president and chief executive officer.

“In Quebec, the profitability of the gas distribution activities is not affected by the decrease in natural gas prices that generally accompanies an economic slowdown. On the contrary, the reduction in prices results directly in a lower bill for our customers, thereby improving the competitive position of natural gas in relation to other energies, which is even more advantageous at a time when our customers are watching their expenses more closely than ever”, added Sophie Brochu.

Segmented Analysis

Net income for the Energy Distribution Sector was CAD66.8 million during the first quarter of the current fiscal year, which is CAD3.8 million higher than the corresponding quarter the previous year.

The reason for this, among others, is a CAD1.8 million increase in net income from the Vermont distribution activity. An increase in Vermont Gas Systems’ (VGS) deliveries due to relatively colder temperatures than during the first quarter the previous year, coupled with the appreciation in the value of the US dollar in relation to the Canadian dollar, increased the net income of VGS and Green Mountain Power Corporation (GMP). Although net income for the Quebec distribution activity (Gaz Metro-QDA) was also up CAD2.0 million, this should reverse by the end of the 2009 fiscal year because of timing differences in recognizing revenues and recording costs.

In addition, net income for the Energy Services Sector was CAD1.4 million, which is CAD1.5 million higher than the corresponding quarter the previous year. This significant improvement is due to higher net income for some of Gaz Métro Plus Limited Partnership’s subsidiaries, notably Consulgaz Inc. and Climatisation et Chauffage Urbains de Montréal, s.e.c., and for Aqua-Rehab Inc.