Public Service Enterprise Q3 Profit Down 26%, But Tops Estimate

10/28/2009 11:36 AM ET

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(RTTNews) - Electricity and natural gas utility Public Service Enterprise Group Inc. (PEG: News ) on Wednesday reported a 26% decline in net income for the third quarter, impacted negatively by lower revenues and a year-ago divestiture gain. The company said cooler than normal weather and continued weak economic conditions combined to reduce demand and lower pricing. Excluding items, earnings per share declined, but topped analysts' consensus estimate.

Looking ahead, the company said that adverse factors that impacted its third-quarter results continue to challenge its ability to meet the upper end of its fiscal year 2009 earnings outlook.

While most industries are affected by the recession, utility companies seem concealed because of the indispensable services they provide. Also, utilities are highly regulated and have less turf competition. However, the economic crisis has forced people to be more prudent in their electricity usage and weakened consumer demand. The weather also has a key role in determining electricity usage, as cooler weather translates to less use of electricity.

The Newark, New Jersey-based Public Service Enterprise Group, or PSEG, operates through three principal direct wholly owned subsidiaries, namely, Public Service Electric and Gas Co., PSEG Power LLC and PSEG Energy Holdings LLC.

Third-Quarter Results

For the third quarter, the Newark, New Jersey-based company's net income declined to $488 million, or $0.96 per share, from $656 million, or $1.29 per share, in the year-ago quarter.

Income from continuing operations for the latest quarter increased to $488 million, or $0.96 per share, from $476 million, or $0.94 per share, in the same period last year, as the year-ago quarter had income from discontinued operations of $180 million, or $0.35 per share.

The results for the latest quarter include a gain of $7 million, or $0.01 per share, on investments in nuclear decommissioning trust funds and non-trading mark-to-market gains of $17 million, or $0.03 per share.

The year-ago quarter results include non-trading mark-to-market gains of $11 million, or $0.02 per share, and losses on investments in nuclear decommissioning trust funds of $12 million, or $0.02 per share.

Excluding items, operating earnings for the latest quarter declined to $464 million, or $0.92 per share, from $477 million, or $0.94 per share, in the year-ago quarter. On average, ten analysts polled by Thomson Reuters expected the company to report earnings of $0.89 per share for the quarter. Analysts' estimates typically exclude special items.