Electric utility American Electric Power Co., Inc. (AEP: Quote) on Friday reported a 93 percent plunge in profit for the fourth quarter as higher revenues were more than offset by restructuring and impairment charges. However, both revenue and operating earnings per share beat analysts' estimates.
Nicholas Atkins, president and chief executive officer of AEP said, "Our operating earnings for the fourth quarter and the year were in line with results from last year despite sluggish demand growth and the negative impact of customer switching in Ohio."
Operating earnings from utility operations for the fourth quarter surged 62 percent from the year-ago period to $283 million. This reflects the positive impact of successful rate proceedings and lower spending as a result of cost-containment efforts, offset by lost earnings due to customer switching in Ohio, higher storm restoration costs and milder temperatures in relation to last year.
However, operating earnings from AEP River Operations plunged 82 percent from last year to $4 million, primarily due to the 2012 drought that had significant impacts on river conditions and crop yields, resulting in reduced grain exports.
Columbus, Ohio-based AEP's net earnings for the fourth quarter were $21 million or $0.05 per share, down sharply from $308 million or $0.64 per share in the year-ago period.
The latest quarter's results include restructuring charges of $22 million or $0.04 per share, Ohio plant impairments of $184 million or $0.38 per share, and UK windfall taxes of $15 million or $0.03 per share.
The prior-year quarter's results include special items that negatively impacted earnings by $114 million or $0.24 per share.
Excluding special items, operating earnings for the quarter were $242 million or $0.50 per share, compared with operating earnings of $194 million or $0.40 per share in the same period last year. On average, analysts polled by Thomson Reuters expected the company to earn $0.46 per share for the quarter. Analysts' estimates typically exclude special items.
Revenue for the quarter rose 6 percent to $3.6 billion from $3.4 billion in the prior-year period. Analysts had a consensus revenue estimate of $3.55 billion.
For fiscal 2012, American Electric Power's net earnings declined to $1.26 billion or $2.60 per share from $1.94 billion or $4.02 per share in the previous year. Operating earnings were $1.497 billion or $3.09 per share, compared to operating earnings of $1.50 billion or $3.12 per share last year.
Revenue for the year declined to $14.9 billion from $15.1 billion in the prior year. Analysts expected revenues of $15.46 billion for the year.
Looking ahead to fiscal 2013, AEP forecasts operating earnings of $3.05 to $3.25 per share. Analysts expect the company to earn $3.13 per share.
For fiscal 2014, the company forecasts operating earnings of $3.15 to $3.45 per share, supported by an earnings growth rate of 4 to 6 percent. The company also said it is increasing the targeted range for its dividend payout ratio to 60 to 70 percent of consolidated earnings.
AEP said it will discuss fourth-quarter and 2012 earnings results, its 2013 business plan, expected capital investment and its growth strategy during a meeting today with investors in New York.
In Friday's regular session, AEP is trading at $44.97, up $0.20 or 0.45 percent on a volume of 555,847 shares.
by RTT Staff Writer
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