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AES Cuts FY12 Earnings View; To Sell Two Power Plants For $230 Mln

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2/27/2012 7:50 AM ET

Power company AES Corp. (AES: Quote) on Monday cut its fiscal 2012 adjusted earnings forecast after reporting a narrower attributable loss for its fourth quarter. Earnings from continuing operations declined despite a slight increase in revenues. Separately, the company announced the sale of Red Oak and Ironwood, two gas-fired power plants, for total proceeds of approximately $230 million.

For the fourth quarter, AES' net income was $445 million, compared to prior year's loss of $169 million. On an attributable basis, the company generated a loss of $209 million or $0.27 per share, narrower than last year's loss of $436 million or $0.55 per share.

On a continuing operations basis, earnings declined to $0.12 per share from the previous year's $0.16 per share. Excluding losses related to currency transaction and impairment, adjusted earnings fell to $0.23 per share from $0.25 per share. On average, four analysts polled by Thomson Reuters estimated earnings of $0.22 per share. Analysts' estimates usually exclude special items.

The company attributed the decline primarily to higher unrealized foreign currency losses and the transaction costs related to the acquisition of DP&L. These were partly offset by increased volume at its generation businesses in Latin America, among other things.

Revenue for the quarter edged up to $4.27 billion from last year's $4.23 billion as growth in generation revenues from Latin America was almost offset by lower results in Latin America - Utilities.

The company noted that its results were benefited by contributions from new businesses, higher volume at its businesses in Brazil due to higher market demand, increased generation in Asia; and higher rates in El Salvador, the Ukraine and IPL.

Victoria Harker, AES Executive Vice President, Chief Financial Officer and President of Global Business Services, said, "We will continue to benefit from the momentum of new capacity additions and cost savings initiatives, including the implementation of strategic sourcing programs, right-sizing our business platform."

Further, the company trimmed its fiscal 2012 adjusted earnings guidance to $1.22 to $1.30 per share from the prior forecast between $1.27 and $1.37 per share. Analysts' consensus currently anticipates 2012 earnings of $1.30 per share. The update is based on commodity and foreign currency forward curves as of December 30, 2011, which resulted in a $0.06 reduction in earnings guidance midpoint, the company noted.

The forecast reflects a 21 percent increase in adjusted earnings from last year.

On a reported basis, fiscal 2012 earnings are projected between $1.28 and $1.36 per share, reflecting an expected asset sale gain and unrealized foreign currency and derivative losses.

The company also said that it expects to initiate an annual dividend of $120 million in the third quarter of 2012, with the first payment in the fourth quarter of 2012.

Separately, AES said it has signed agreements to sell AES Red Oak LLC, an 832 megawatt combined cycle gas turbine plant located in New Jersey, to Energy Capital Partners. The company would also sell AES Ironwood Inc., a 705 MW CCGT plant, to PPL Generation LLC, a unit of PPL Corp. (PPL: Quote).

AES closed Friday's regular trading session at $13.80, up $0.03 or 0.22 percent.

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by RTT Staff Writer

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