Electric utility AES Corp. (AES) Friday reported a plunge in profit for the second quarter, as revenues dropped 15% affected by unfavorable currency movements and lower fuel prices. On an adjusted basis, profit increased from last year and exceeded analysts' consensus estimate. Looking ahead, the company raised its earnings forecast for 2009.
The Arlington, Virginia-based company's net income for the second quarter plunged to $531 million from $1.160 billion in the previous year. Net income attributable to AES Corp. declined to $303 million or $0.45 per share from $903 million or $1.31 per share in the prior year.
Adjusted for mark-to-market, currency transaction and disposition/acquisition changes, earnings for the latest period were $0.28 per share. In the previous year, adjusted earnings was $0.25 per share.
On average, five analysts polled by Thomson Reuters expected earnings of $0.20 per share for the quarter. Analysts' estimates typically exclude special items.
Revenues for the quarter declined to $3.495 billion from $4.126 billion in the previous year. Analysts were looking for revenues of $3.31 billion.
The company attributed the revenue decline to unfavorable movements in foreign currency exchange rates of $520 million, mostly relating to the Brazilian Real depreciation of 26%, and lower revenue at generation businesses in Chile due to lower fuel prices.
Geographically, Latin America-Generation revenues dropped to $895 million from $1.177 billion, while revenue at the utility segment dropped to $1.367 billion from $1.577 billion.
North America-Generation generated $475 million in revenues, compared to $538 million last year, while Utilities brought in $261 million in the region, slightly less than $267 million in the previous year.
Europe-Generation revenues declined to $152 million from $268 million. Revenue from Asia-Generation rose to $337 million from $301 million.
Gain from sales of investments for the quarter dropped to $102 million from $908 million in the previous year.
AES is engaged in the generation and distribution of electricity in Asia, North America, Europe, Latin America, and Africa. The company noted today that during the latest quarter it benefited from its geographic and fuel diversity, with strong performance in Chile offsetting reduced demand and lower wholesale prices in North America.
Increased production in Chile and the Philippines, reduced operating expenses and improved working capital also contributed to the quarterly results, it said. In addition, AES benefited from a favorable settlement of a legal claim at a European affiliate and a lower effective tax rate, primarily related to a U.S. subsidiary tax restructuring.
For the first quarter of 2009, the company's net income was $501 million, up from $408 million in the previous year. However, first-quarter net income attributable to AES was $218 million or $0.33 per share, down from $233 million or $0.34 per share in the previous year. First-quarter revenues were $3.38 billion, down 17% from $4.08 billion in the prior-year quarter.
For the first half of the year, net income attributable to AES Corp. declined to $521 million or $0.78 per share from $1.136 billion or $1.65 per share in the prior year. Revenues dropped to $6.873 billion from $8.207 billion in the previous year.
Additionally, the company increased its 2009 adjusted earnings per share guidance to a range of $1.05-$1.10 from the prior range of $0.97-$1.07. The company also raised the forecast for 2009 earnings per share from continuing operations to $1.15-$1.20 from $1.03-$1.13.
Analysts expect earnings of $0.97-$1.07 per share for 2009 with a consensus of $1.03 per share.
Further, AES increased the lower end of its full year 2009 Proportional Free Cash Flow guidance by $100 million and updated its full year guidance from $650-$850 million to $750-$850 million. The company also raised the lower end of its full year 2009 Subsidiary Distributions guidance by $100 million and updated its full year guidance from $1.100-$1.300 billion to $1.200-$1.300 billion.
AES closed Thursday's regular trade at $13.14, up from the previous close of $13.09, on 6.50 million shares.
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