Wholesale marketing boosts companies' second quarter results

By the OGJ Online Staff

HOUSTON, July 24 -- Wholesale energy marketing helped boost second quarter earnings at American Electric Power Co. Inc., Exelon Corp., Northeast Utilities, and Southern Co.

Public Service Enterprise Group Inc., owner of New Jersey's largest utility, reported a smaller-than-expected increase in second-quarter earnings, citing lower results from its utility operations. Southern, Atlanta, Ga., and Exelon, Chicago, warned of third quarter results.

AEP reported second quarter earnings rose 85% on the strength of its wholesale natural gas business, despite uncertainty over the economy and energy price caps in the West. The Columbus, Ohio, company reported income of $287 million, or 89¢/share on revenue of $14 billion, up from $154 million, or 51¢/share on revenue of $8 billion in the same period a year ago.

Wall Street had expected earning of 70-89¢/share, with a consensus estimate of 78¢/share, according to Thomson Financial/First Call.

The company said it expected 2001 and 2002 earnings to be in line with Wall Street estimates. AEP said it expects to earn $3.50-$3.60/share next year, and $3.75-$3.85/share in 2002.

Northeast Utilities, Hartford, Conn., New England's largest distributor of electricity and gas, attributed better than expected second quarter earnings to its unregulated operations. It reported net income of $46.7 million, or 35¢/share, up from $12.2 million, or 8¢/share, in the year-ago period.

Excluding nonrecurring events, NU earned $38.8 million, or 29¢ /share in the second quarter of 2001, compared with $20.3 million, or 14¢/share, in the second quarter of 2000.

Analysts surveyed by Thomson Financial/First Call predicted second quarter earnings of 15-25¢/share with a consensus of 21¢/share.

Exelon
Utility holding company Exelon Corp., formed last year by PECO Energy Co.'s purchase of Unicom Corp. reported wholesale marketing helped drive an 18% increase in second quarter profits. Exelon reported second quarter net income of $315 million, or 97¢/share on revenue of $3.65 billion, compared to pro forma results of $268 million or 83¢/share on revenue of $3.19 billion in the year earlier period. The consensus estimate among analysts surveyed by Thomson Financial/First Call was 90¢/share.

The company cautioned it expected "challenges" in the wholesale power marketing and enterprise group in the second half of the year. However, Exelon said it expects to meet its 2001 earnings target of $4.50/share.

Southern Co. said second quarter profits were $270 million from continuing operations or 40¢/share on revenue of $26.6 billion, up from net income of $256 million or 39¢/share on revenue of $2.5 billion in the year ago second quarter. The largest power company in the Southeast said strong wholesale prices helped offset mild weather.

However, company executives said an industrial slowdown and mild weather could hurt third quarter results. Gale Klappa, chief financial officer, predicted quarterly results will be 77-79¢/share, compared to analyst predictions of 82¢-85¢/share.

Public Service Enterprise Group Inc., Newark, NJ, owner of New Jersey's largest utility, blamed lower-than-projected results from utility operations for a smaller-than-expected increase in second quarter earnings.

Net income rose to $143 million, or 68¢/share, up from $142 million, or 66¢/share, a year earlier. Analysts were expecting consensus earnings of 72¢/share, according to Thomson Financial/First Call. CEO E. James Ferland said PSEG's earnings were in line with company expectations and "solidly support" the company's 2001 earnings target of $3.70/share.