Integrated energy company Entergy Corp. (ETR) Thursday reported a 3.2% decline in third-quarter profit, hurt by weakness in its Utility and Non-Nuclear Wholesale businesses. Looking ahead, the company also confirmed its earnings outlook for fiscal 2009. The company's third quarter as-reported earnings were $455.2 million or $2.32 per share, compared with $470.3 million or $2.41 per share for third quarter of 2008.
On an operational basis, Entergy's earnings declined to $470.7 million or $2.40 per share from $487.3 million or $2.50 per share last year.
Analysts polled by Thomson Reuters expected the company to report earnings of $2.48 per share for the quarter. Analysts' estimates typically exclude special items.
For the second quarter, the New Orleans, Louisiana-based company's net income attributable to Entergy Corp. was $226.81 million or $1.14 per share.
The company posted total operating revenues of $2.94 billion, down from $3.96 billion reported in the prior-year quarter. Three analysts had a consensus revenue estimate of $3.90 billion for the quarter.
For the preceding second quarter, the company's total operating revenue was $2.52 billion.
Commenting on the results, Wayne Leonard, Entergy's chairman and chief executive officer, stated, "While we continue to experience the negative effects of the slowed economic recovery, we are also seeing the positive benefits from progress in key initiatives in both our utility and non-utility nuclear businesses."
The company's Electric revenues were $2.2 billion, down from $3.21 billion in the prior-year quarter. Natural gas revenues dropped to $24.0 million from $42.0 million a year ago. In addition, Competitive businesses generated revenues of $717.6 million, up from $712.9 million last year.
The company said Utility, Parent & Other's results were declined due to higher income tax expense and higher operation and maintenance expense. Utility, Parent & Other had as-reported earnings of $259.6 million or $1.32 per share, compared to $286.0 million or $1.47 per share in the third quarter of 2008.
On an operational basis, the business's earnings declined to $264.8 million or $1.35 per share from $303.0 million or $1.56 per share last year.
Residential sales, on a weather-adjusted basis, increased 3.2% from the prior-year quarter. Commercial and governmental sales, on a weather-adjusted basis, were up 11%, whereas industrial sales dropped 6.3% from the same quarter of fiscal 2008. As per the company, residential and commercial sales increases reflected the absence of two hurricanes that reduced usage in third quarter of last year. Industrial for large customers reflected continued weaknesses in chemicals and primary metals.
Entergy Nuclear's earnings increased on higher revenue from increased production due to fewer planned and unplanned outage days and higher other income. Entergy Nuclear earned $200.4 million or $1.02 per share on an as-reported basis and $210.7 million or $1.07 per share on an operational basis in the third quarter. This compares with $205.3 million or $1.05 per share on as-reported and operational basis in the third quarter of 2008.
In addition, Entergy's Non-Nuclear Wholesale Assets business incurred a loss of $4.8 million or $0.02 per share in the third quarter, on both as-reported and operational basis, compared to a loss of $21.0 million or $0.11 per share a year ago. Business results improved primarily due to lower income tax expense due to the absence of a 2008 adjustment associated with the redemption of an investment that had the effect of increasing income tax expense.
Entergy said that the announced spin-off of its non-utility nuclear business will establish a new independent, publicly traded company, Enexus Energy Corp. Entergy and Enexus intend to enter into a nuclear services joint venture, with equal ownership, with the joint venture being named EquaGen LLC.
On October 1, Enexus executed Amendment No. 1 to its credit agreement dated December 23, 2008, increasing the total financing facility amount to $1.2 billion from $1.175 billion. Enexus will not be permitted to draw down the facility until certain customary and transactional conditions are met on or prior to July 1, 2010. Final terms of the transactions and spin-off completion are subject to the approval of the Entergy Board of Directors.
For the nine-month period, the company earned $917.32 million or $4.66 per share, compared with $1.05 billion or $5.33 per share, a year ago. Total revenues declined 18.3% to $8.25 billion from $10.09 billion last year.
Going ahead, Entergy reaffirmed its fiscal 2009 earnings guidance range of $6.20 - $6.80 per share on an operational basis. The company also continues to expect full-year 2009 as-reported earnings in the range of $6.00 - $6.60 per share, which incorporates spin-off expenses for outside services through June 30, 2009, in addition to projected dis-synergies associated with the spin-off of Entergy's non-utility nuclear business and plans to enter into a nuclear services joint venture.
Analysts expect the company to report earnings of $6.46 per share for fiscal 2009.
ETR is trading at $79.76, down $0.98 or 1.21%, on a volume of 600 shares.
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