But the drop in wholesale electricity sales is expected, so the company's stock price doesn't take a big hit.
By LOUIS HAU
Published April 22, 2004
On the face of it, Progress Energy Inc. appeared to have a horrendous first quarter, as net income plunged to less than half of what it was during the same period last year.
But Wall Street shrugged off the numbers released Wednesday morning. That's because most of the earnings decline could be traced back to an expected drop in wholesale electricity sales in the Carolinas. As a result, the Raleigh, N.C., parent of Progress Energy Florida of St. Petersburg reaffirmed its earnings outlook for full-year 2004.
In the quarter ended March 31, Progress posted net income of $108-million, or 45 cents a share, down sharply from earnings of $219-million, or 94 cents a share, a year earlier. First-quarter revenue climbed to $2.23-billion from $2.19-billion a year earlier.
Ongoing earnings came in at 64 cents a share, short of the Thomson First Call analyst consensus projection of 75 cents and down from 84 cents a year earlier.
A sharp drop in wholesale electricity sales by Progress Energy Carolina's regulated power plants accounted for an 8-cent decline in earnings per share. Progress Carolinas' wholesale sales were unusually high a year earlier due to severe winter weather in the Northeast. The cold front hit northern states at the same time the Carolinas were experiencing moderate temperatures, giving Progress a large amount of excess electricity to sell in the wholesale market, Progress spokesman Garrick Francis said.
Also hurting the quarter's numbers were an increase in operating and maintenance costs in Florida, a decline in unregulated generation earnings and share dilution due to common stock offerings.
Progress Energy Florida had net income of $49-million in the first quarter, down from $71-million a year earlier, due to mild weather and higher costs related to tree-trimming efforts and planned plant outages for maintenance work.
Progress Energy Carolinas posted net income of $116-million, down from $135-million a year earlier, due to the fall in wholesale sales and higher operating and maintenance costs.
Despite the weak quarter, Progress chief financial officer Geoff Chatas said the company still expects 2004 earnings between $3.50 and $3.65 a share, compared to $3.56 a share last year.
Progress also said it reached a final agreement with the Internal Revenue Service in late February certifying that the company's Colona coal-based synthetic-fuel facilities in Kentucky are eligible for lucrative federal tax credits. The company said the IRS is still determining whether four of its other synthetic fuel facilities are in compliance. Progress, one of the nation's largest producers of synfuel, reaped a total of $345-million in synfuel tax credits in 2003, up from $291-million in 2002.
Also on Wednesday, Progress said it promoted Florida customer service director Martha Barnwell to vice president for the newly formed Florida north coastal region, which includes all service territories north of Pasco County.
Progress' shares closed Wednesday at $43.81, down 34 cents.
- Louis Hau can be reached at hau@sptimes.com or 813 226-3404.
