Energy and utility holding company PPL Corp. (PPL), Tuesday, reported a net loss for the second quarter, hurt mainly by charges related to hedging losses. Quarterly results were also affected by lower wholesale energy margins, unfavorable currency exchange rates, and lower domestic electricity sales. In addition, the company reaffirmed its 2009 earnings forecast, while lowering its 2010 earnings outlook. Following news, the company's shares lost more than 11% in regular trading hours.
The Allentown, Pennsylvania-based company posted a net loss attributable to PPL of $7 million or $0.02 per share, compared to net earnings of $190 million or $0.50 per share in the prior year quarter.
Results for the latest quarter included unrealized losses of $88 million or $0.23 per share from energy-related, non-trading economic hedges.
Excluding special items, earnings from ongoing operations fell to $119 million or $0.32 per share from $190 million or $0.50 per share in the year-ago quarter. On average, 5 analysts polled by Thomson Reuters expected the company to report earnings of $0.40 per share for the second quarter. Analysts' estimates typically exclude special items.
Earnings from ongoing operations for PPL's supply business segment decreased by 65% to $0.09 per share. Earnings from ongoing operations for Pennsylvania delivery business segment declined 38% to $0.05 per share a year ago. Earnings from ongoing operations for international delivery business segment increased 13% to $0.18 per share for the second quarter of 2009.
Total operating revenues for the second quarter increased to $1.67 billion from $1.01 billion in the same quarter of last year.
Total operating expenses for the quarter increased to $1.57 billion from $629 million in the previous year quarter.
For the first half of 2009, PPL reported net earnings attributable to PPL of $234 million or $0.62 per share, down from $450 million or $1.19 per share in the year-ago period.
Earnings from ongoing operations were $345 million for the first six months of 2009. On a per share basis, earnings from ongoing operations fell to $0.91 from $1.11 a year ago.
Total operating revenues for the year-to-date period increased to $4.02 billion from $2.53 billion in the prior year period.
Looking ahead, for 2009, PPL continues to expect earnings from ongoing operations of $1.60 to $1.90 per share, and reported earnings of $1.31 to $1.61 per share, which reflects special items recorded through June 30, 2009. Street expects earnings of $1.82 per share for the year 2009.
The company noted that its 2009 forecast of reported earnings does not reflect the expected gain on the sale of PPL's Maine hydroelectric business.
For 2010, PPL now expects earnings in the range of $3.10 to $3.50 per share. Earlier, the company estimated 2010 earnings to be at the low end of the prior forecasted range of $3.60 to $4.20 per share. Analysts project the company to report earnings of $3.65 per share for the year 2010.
"Given the significant economic uncertainty, challenging market conditions and lower regional customer demand for electricity, we took aggressive action to further lower our 2010 earnings risk by increasing our baseload generation hedge levels to 98 percent and lowering our expectations for our marketing and trading business," said James Miller, PPL's chairman, president and chief executive officer.
PPL is currently trading at $30.03, down $3.95 or 11.62% on a volume of 6.01 million shares.
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