AEP raises 2001 earnings target on first quarter results

American Electric Power Co. Inc. executives Tuesday said they were raising the annual earnings target 10¢/share to $3.50-$3.60/share based on a 89% increase in 2001 first quarter earnings, compared to the same period last year. First quarter results were about in line with analysts expectations. The Columbus, Ohio diversified energy company reported net income of $220.5 million or 68¢/share on revenue of $13.5 billion in the 2001 first quarter.

Apr 24th, 2001


By Kate Thomas
OGJ Online

HOUSTON, Apr. 24 -- American Electric Power Co. Inc. executives Tuesday said they were raising the annual earnings target 10¢/share to $3.50-$3.60/share based on a 89% increase in 2001 first quarter earnings, compared to the same period last year.

The Columbus, Ohio diversified energy company reported net income of $220.5 million or 68¢/share on revenue of $13.5 billion in the 2001 first quarter, excluding one-time gains, up from net income of $117 million or 32¢/share on revenue of $6.1 billion in the comparable 2000 quarter.

Analysts expectations ranged from 54-85¢/share for the quarter, according to Thomson Financial/First Call, with the mean at 64¢/share. In early Tuesday trading, AEP's stock was down 43¢/share to $49.32.

Chief financial officer Henry Fayne said during a conference call the new guidance for 2001 earnings is the "best estimate we can give" based on the "uncertainty out there." He noted in response to a question industrial sales were down 6.2% for the quarter, reflecting softening economic conditions.

He attributed the first quarter earnings increase to "strong performance" by the company's wholesale business and the return to service of the Cook nuclear plant. The 1,090 Mw Unit 1 returned to service in late December and the 1,020 Mw Unit 2, in June 2000.

The earnings contribution from the company wholesale operations increased 152% or 32¢/share from the year earlier period, the company said. Wholesale electric domestic trading volume for the quarter was 139 million Mw-hr, a 58% increase from the 2000 first quarter. Wholesale gas trading volume for the quarter was up 7.4% to 319 bcf.

Fayne told analysts forward electric pricing curves for the summer looked about "flat," compared to what the company has said previously about the price outlook in its markets. He also said AEP has no exposure "to speak of" in the western electricity markets.

As a major coal consumer, AEP is "sensitive" to rising coal prices, Fayne said, adding the company is an active coal trader and will rely on hedging and other activities to lock in prices.

The energy delivery business, consisting of US electric transmission and distribution contributed 47¢/share in the first quarter, down 1¢, compared to the year earlier period, reflecting timing differences associated with operating expenses, the company said.

It also reported a reclassification of $6.9 billion in settled forward energy transactions to purchased power expenses from revenue for the first quarter of 2001 and $3.1 billion in the first quarter of 2000.

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