Energy and utility holding company PPL Corp. (PPL), Thursday, reported a slump in profit for the third quarter, hit by charges related to hedging and income tax matters, as well as an impairment for the pending sale of assets. Adjusted earnings came in ahead of analysts' consensus estimate, while revenues fell short. Looking ahead, PPL reiterated its earnings outlook for fiscal years 2009 and 2010.
Cooler third-quarter weather and reduced power demand during the economic downturn have hurt utility companies. Utility is one of the areas that the Obama Administration wants to strengthen, with the creation of a Smart Grid, making use of smart meters and load-controllers. President Barack Obama had announced a $3.4 billion federal investment, most of which would go to utilities to install meters, transformers and other equipment that can control the flow of electricity and reduce power use and homeowner bills.
The Allentown, Pennsylvania-based company's net income attributable to PPL for the quarter plunged to $20 million or $0.05 per share from $203 million or $0.54 per share in the year-ago quarter.
The results for the third quarter include special item charges of $0.47 per share, $0.34 per share related to certain economic hedge activity, $0.07 per share related to a change in the method of accounting for certain expenditures for income tax purposes, and $0.06 per share for additional tax expense related to the 2007 sales of its Latin American businesses.
Excluding one-time items, earnings from ongoing operations for the quarter rose 16% to $195 million or $0.52 per share from $168 million or $0.45 per share in the year-ago quarter.
On average, six analysts polled by Thomson Reuters expected the company to earn $0.45 per share for the quarter. Analysts' estimates typically exclude one-time charges and gains.
In the preceding second quarter, PPL reported 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.
Operating revenues for the recent third quarter slumped to $1.81 billion from $3.00 billion in the same period last year. Street analysts' had a consensus revenue estimate of $2.99 billion for the quarter.
For the preceding second quarter, operating revenues increased to $1.67 billion from $1.01 billion reported in the same period last year.
Segment wise, for the third quarter, the company's supply business segment earnings from ongoing operations increased, while Pennsylvania delivery business segment earnings from ongoing operations declined, primarily due to lower delivery revenues, resulting from the impacts of weather and the economy, and higher financing costs. Earnings from ongoing operations for PPL's international delivery business segment declined, reflecting the net result of higher U.K. and U.S. income taxes, less favorable currency exchange rates and lower financing costs.
Total operating expenses for the quarter increased to $1.57 billion from $629 million in the previous year quarter. Operating income for the quarter dropped significantly to $181 million from $119 million in the year-earlier period.
James Miller, PPL's Chairman, President and Chief Executive Officer. "At this point in the year, we are pleased with our financial performance and our ability to track ahead of plan, despite ongoing pressure on wholesale energy prices and customer demand due to the continuing weak economy and mild weather. Our relatively strong ongoing earnings results for the quarter reflect the continued benefits of cost-control actions we took early in the year."
For the nine-month period, the company's net income attributable to PPL plunged to $254 million or $0.67 per share from $653 million or $1.74 per share reported for the same period last year. Excluding items, earnings from continuing operations for the period slipped to $540 million or $1.43 per share from $586 million or $1.56 per share a year ago.
Total operating revenues for nine months increased to $5.83 billion from $5.50 billion in the same period last year.
The company indicated that tax accounting change, for which Internal Revenue Service consent was received, is expected to provide a cash flow benefit of approximately $200 million in 2009, as well as smaller cash flow benefits in future periods.
Looking ahead, for 2009, PPL continues to expect earnings from ongoing operations of $1.60 - $1.90 per share, and reported earnings of $0.84 - $1.14 per share, reflecting special items recorded through Sept. 30, 2009. Analysts currently expect the company to report earnings of $1.75 per share for the full year.
The company noted that the reported earnings guidance does not reflect the expected gain on the sale of PPL's Maine hydroelectric business.
For 2010, PPL still anticipates earnings of $3.10 - $3.50 per share. The Street currently expects the company to report earnings of $3.29 per share for the quarter.
The company expects the significant increase in earnings forecast for 2010 to come almost entirely from increased margins in the company's supply business.
PPL said it remains convinced that its hedge programs, aggressively executed when forward power prices for 2010 were much higher than they are today, will provide greater earnings and cash flow predictability.
Amongst others in the sector, Akron, Ohio-based power electric utility company FirstEnergy Corp. (FE), on October 27 posted a profit for the third quarter that more than halved from last year, reflecting weak revenues across all its business segments. 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. The company's quarterly revenues declined to $3.41 billion from the previous year's revenue of $3.91 billion
PPL is currently trading at $29.67, up $0.19 or 0.64% on the NYSE. In the past 52 weeks, the stock trended in a broad range of $24.25 - $34.42, with a three-month average volume of 2.37 million shares.
For comments and feedback contact: editorial@rttnews.com
June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.