By the OGJ Online Staff
HOUSTON, Jan. 30 -- Energy marketer Mirant Corp. Wednesday cut 2002 estimated earnings and said it expects to take a "significant," one-time charge in the first quarter for canceled turbines, staff reductions, and other items.
Based on market conditions, Mirant said it was further reducing the combined 2002-2003 capital budget to $2.9 billion from $5.9 billion by suspending construction on two plants, warehousing turbines for two other projects, and by putting in place the ability to cancel all remaining turbines.
The Atlanta, Ga. company also cut its 2002 estimated earnings to $1.60-$1.70/share, down from December's guidance of $1.90-$2/share. Mirant blamed lower projected margins and reduced business activity in North America.
For 2003, Mirant forecasts earnings will be flat if current market conditions persist. Assuming an improvement from current market conditions, the company said it expects earnings to grow 10-15% annually, on average, over the next 5 years.
"While we have confidence in the long-term prospects of our business and the competitive energy sector, we have reduced our earnings expectations based on a forecast of lower prices and volatility in North America for the next couple of years," said CEO Marce Fuller.
Mirant shares have been hard hit by the fallout from Enron Corp.'s bankruptcy protection filing. It has since retrenched to shore up the balance sheet and improve liquidity. Mirant holds investment grade credit ratings with Standard & Poor's and Fitch Inc. But the company was downgraded by Moody's Investor Services in December 2001.
The company reported 2001 fourth quarter net income of $30 million or 9¢/share, after one-time gains and losses, down from net income of $67 million, or 20¢/share, in the year earlier quarter. Mirant said it took a $66 million charge related to its exposure to Enron Corp. and a $3 million gain from the sale of Edelnor in Chile. Excluding these one-time events, fourth quarter earnings from operations totaled $93 million or 27¢/share, a 35% increase over the comparable 2000 quarter.
For the year ended Dec. 31, Mirant reported net income of $568 million or $1.63/share, after one-time gains and losses.
During the fourth quarter, Mirant sold 116.6 million Mw-hr of electricity in North America, a 94% increase over the same quarter last year. The company also marketed 15.6 bcfd of natural gas during the quarter, up 41% from the same period last year. Full-year power volumes totaled 343.5 million Mw-hr and gas volumes averaged 13.3bcfd.
Mirant said it has $750 million in available cash and credit lines, despite posting additional collateral required for its risk management business, and absorbing more funds than originally anticipated in a loan refinanced by its Asian business unit.