Electric utility company FirstEnergy Corp. (FE) on Tuesday posted a profit for the third quarter that more than halved from last year, reflecting weak revenues across all its business segments. On a per share basis, normalized non-GAAP earnings fell from last year, but topped the Street view. In addition, the company narrowed its earnings forecast for the full year.
The company's third-quarter net income totaled $230 million, compared to $471 million posted a year earlier. Net income available to FirstEnergy Corp. was $234 million or $0.77 per share, compared to $471 million or $1.54 per share in the prior-year quarter.
Special items during the most recent quarter included a $0.30 per share decrease in earnings for costs related to the early retirement of $1.2 billion of debt at FirstEnergy Corp., a $0.07 per share decrease in earnings associated with organizational restructuring charges; and a $0.03 per share increase in earnings related to an adjustment to the impairment of securities held in trust for nuclear decommissioning activities. The prior-year results included tax adjustments that increased earnings in that quarter by $0.12 per share when compared to the third quarter of 2009.
Normalized non-GAAP earnings, excluding special items, were $1.11 per share for the third quarter of 2009, compared to $1.60 per share for the same quarter of last year.
On average, 6 analysts polled by Thomson Reuters expected the company to post earnings of $1.05 per share. Analysts' estimates typically exclude special items.
Quarterly revenues declined to $3.41 billion from the previous year's revenue of $3.91 billion.
The company noted that the electric distribution deliveries declined 2.9 million megawatt-hours or MWH, or 10%, due to the economic downturn and mild weather in the FirstEnergy companies' service territories. Commercial deliveries fell 598,000 MWH, or 6%, while residential deliveries decreased 834,000 MWH, or 8%.
Lower distribution delivery revenues, excluding the impact of the Ohio rate increases, reduced earnings by $0.08 per share. The majority of this decline was due to lower sales to residential customers, as a result of the unusually mild weather in the third quarter of 2009.
While the distribution rate increase for the three Ohio utilities increased earnings by $0.05 per share in the third quarter, the implementation of the Ohio delivery service improvement rider, effective in April 2009, increased earnings by $0.06 per share.
Consolidated electric generation sales dropped 3.8 million MWH, or 11%, while retail generation sales fell 3.1 million MWH, or 11%, and wholesale sales were down 724,000 MWH, or 10%. The company's energy delivery services segment generated third-quarter revenues of $2.20 billion, down from $2.66 billion reported last year.
Competitive energy services division generated quarterly revenues of $1.11 billion, a decline from the prior-year's revenue of $1.25 billion. Ohio transitional generation services' revenues amounted to $739 million for the three months ended September 30, 2009, compared to $813 million in the previous year.
For the nine-month period, the company reported net income available to FirstEnergy Corp. of $768 million or $2.51 per share, compared to $1.01 billion or $3.29 per share in the year-ago period. Year-to-date revenues fell to $10.0 billion from $10.4 billion reported in the corresponding period of the previous year.
Looking ahead, the company narrowed its fiscal 2009 normalized non-GAAP earnings forecast, excluding special items, to $3.70 -$3.80 per basic share from $3.70 - $3.85 per share. Wall Street analysts have a consensus earnings estimate of $3.75 per share for the full year. GAAP earnings for the full year is estimated to be in the range of $3.71 - $3.81 per basic share.
Among FirstEnergy's rivals, Allegheny Energy Inc. (AYE) is slated to release its quarterly results on October 29, with analysts projecting earnings of $0.54 per share on revenues of $952.14 million.
Another peer, Dominion Resources Inc. (D) will publish its third-quarter results on October 30, with analysts expecting earnings of $0.90 per share on revenues of $3.94 billion. The energy company projects third-quarter operating earnings in a range of $0.88 - $0.93 per share. For fiscal year 2009, Dominion Resources reaffirmed its outlook for operating earnings in a range of $3.20 - $3.30 per share. The company lowered its fiscal 2010 operating earnings outlook to a range of $3.20 - $3.40 per share from its prior range of $3.33 - $3.50 per share. Analysts expect the company to report earnings of $3.23 per share for 2009 as well as for 2010.
Yet another competitor, Public Service Enterprise Group Inc. (PEG) is set to announce third-quarter results before the market opens on October 28, with analysts forecasting earnings of $0.89 per share, on revenues of $4.67 billion. For fiscal year 2009, PSEG said that the 'abnormally cool' weather conditions it has experienced through the end of July will challenge its ability to meet the upper end of its 2009 earnings guidance range of $3.00 - $3.25 per share. Analysts expect the company to report earnings of $3.10 per share for fiscal 2009.
FirstEnergy shares, which have been trading between $35.26 and $59.00 in the past 52 weeks, are currently trading at $44.11, down 88 cents or 1.96%.
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