b>By the OGJ Online Staff
HOUSTON, Jan. 17 -- Kinder Morgan Inc., in a difficult year for the economy and particularly for energy companies, reported 2001 earnings of $225.2 million or $1.96/share on revenue of $1.1 billion, beating analysts' expectations of $1.90/share.
Income for 2000 was $152.4 million or $1.61/share on revenue of $2.8 billion. CEO Rich Kinder said the company had a "great" year with earnings up 52% "handily" beating consensus estimates. He predicted the company could do it again for 2002 and increased earnings guidance to $2.55-$2.65/share from $2.40-$2.50/share. The lower end of the earnings projection is without additional acquisitions.
In mid-day trading, KMI stock was down 45¢/share to $56.54. KMI is a midstream energy company that consists of its ownership interest of the general partner of Kinder Morgan Energy Partners LP, Natural Gas Pipeline Co. of America, product pipelines, retail distribution, and power plants.
The partnership contributed $272.4 million in distributions to KMI in 2001, up 82% from 2000. The partnership grew from internal growth in its pipeline and terminal businesses. "NGPL had a strong year in 2001, as transportation and storage capacity remains virtually sold out on the pipeline and management continues to successfully recontract capacity and enter into contracts for new generation load," Kinder said.
The retail business owned by KMI reported 15% growth in earnings. Kinder emphasized on a conference call that KMI is risk averse and had hedged out weather fluctuations. "But we didn't do any swaps with bankrupt companies," he said. " And we don't like volatility so we took it out."
He said the retail unit is expected to grow about 4%/year. KMI's power business earnings roughly double from last year. The increase reflected the growth in fee income from gas-fired power plant development.
Kinder said the company's growth strategy doesn't include owning and operating merchant power plants. "There has been a draconian shift in the power business," Kinder said. "We are not counting on any new plants this year."
In terms of exposure to the Enron Corp. bankruptcy protection filing, KMI wrote off $4.8 million and the partnership wrote off $6 million. Enron filed for reorganization Dec. 2 and left many energy companies exposed to open energy contracts.
KMI's debt is in the 47% range, but Kinder said that is projected to be back down to 40% by the end of 2002. After KMI merged with KN Energy, its debt shot up to 71%. Kinder said KMI has a strong balance sheet and with its strong credit rating can be ready to make future acquisitions as the opportunities arise.
Fourth quarter net income rose 30% to $72.4 million, or 60¢/share in 2001, up from $55.3 million, or 47¢/share in the year-ago period.
