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[cdn-nucl-l] Entergy Tops Estimates
Posted on SmartMoney.com on October 30, 2002 and at:
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Entergy Tops Estimates
October 30, 2002
Facing some of the severest market conditions ever seen, three major
energy companies' third-quarter results reflected heavy losses, reduced
earnings and flat forecasts.
Beleaguered energy trader Dynegy Inc. (DYN) swung to a $1.8 billion loss
in the quarter, hurt by a whopping $1.75 billion in charges related to
reorganization and a turbulent wholesale trading market.
The Houston-based company's loss equaled $4.92 a share
In the year-earlier period, Dynegy earned $286 million, or 85 cents a
Charges in the latest quarter included $908 million for goodwill
impairment in its wholesale energy network segment; $566 million for the
loss on the sale of Northern Natural Gas Co.; and $145 million for
reserves in the company's risk-management portfolio due to reduced
liquidity in power markets.
Revenue plunged 25% to $1.71 billion from $2.3 billion.
"The energy merchant sector continues to experience a downturn
characterized by lower liquidity levels, reduced power prices and credit
concerns," said Bruce Williamson, the company's new president and chief
executive. "Dynegy's strategy to manage these challenges is to
restructure the company around our generation, natural gas liquids and
regulated energy delivery businesses and to exit aspects of the
marketing and trading business unrelated to our physical assets."
Mr. Williamson said the big charge doesn't affect the company's
liquidity position, which he said is at a "sufficient" level.
Separately, Dallas-based TXU Corp. (TXU), saw third-quarter earnings
drop 38% to $282 million, or 73 cents a share, from $334 million, or
$1.28 a share, a year earlier. The company cited a weak performance in
Europe and warning it may face a future write-off of as much as $4.5
Earnings include results from the European operations, which are
expected to be listed as discontinued operations in the fourth quarter.
Excluding those results and other items, TXU said it earned 92 cents a
share. That was in line with its reduced forecast for earnings before
items of 90 cents to 95 cents a share.
Earlier this month, TXU lowered its previous target for earnings of
$1.55 to $1.65 a share and slashed its outlook for the rest of this year
and for 2003, amid weak wholesale power prices and retail competition in
Revenue increased 7.8% to $4.28 billion from $3.97 billion.
TXU said its North American energy and energy delivery segments and
Australia segments continued to contribute solidly.
But amid the energy sector's troubles, TXU announced on Oct. 21 that it
would sell most of its failing British power businesses for about $2.1
billion to Germany's E.On AG (EON) and said it would take a write-off of
as much as $4.5 billion as a result of its European troubles.
TXU'S European business recorded a loss of $37 million, compared to
income of $21 million in the 2001 third quarter.
Earlier this month, TXU said it has $2.6 billion of available liquidity
before any financings.
Some brighter news came from New Orleans-based Entergy Corp. (ETR),
which reported a 15% increase in third-quarter net income, reflecting
strength in both its utility and nuclear operations.
The energy trader and regional power company posted net income of $360.9
million, or $1.59 a share, compared with $312.5 million, or $1.39 a
share, in the year-earlier third quarter.
The latest period included a gain of $20.9 million, or nine cents a
share, primarily from the sale of two development projects in Spain.
Excluding items in both quarters, Entergy earned $340 million, or $1.50
a share, compared with $278.7 million, or $1.24 a share, a year earlier.
The latest result was five cents a share ahead of a consensus estimate
from analysts surveyed by Thomson First Call. Entergy had said earlier
this month that it expected to earn at least $1.45 a share, including
Operating revenue slipped 4.2% to $2.47 billion from $2.58 billion.
The utility division earned $243.7 million, or $1.07 a share, up 9% from
a year earlier, thanks to lower expenses as well as higher electric
sales volume, which reflected customer growth and higher electricity
The nuclear business saw earnings more than double to $73.1 million, or
32 cents a share, primarily because of results from Indian Point 2,
which was acquired in September 2001, and the contribution for part of
the latest quarter of Vermont Yankee, which Entergy acquired at the end
The company's commodities services business, which includes Entergy-Koch
L.P. and Entergy's non-nuclear wholesale assets, reported earnings of
$48.3 million, or 22 cents a share, down 28% from a year earlier, in
large part because of restructuring costs.
"Looking ahead to 2003, we are highly confident that our $3.75 to $3.95
range is well within our reach, given the consistently solid performance
and underlying strength of each of our businesses," said C. John Wilder,
Entergy's chief financial officer.
-Sue Goff; Dow Jones Newswires; 609-520-7835
-Amy Reilly; Dow Jones Newswires; 609-520-7806
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