Profits rose 6% despite mild summer

BGE '94

January 21, 1995|By John E. Woodruff | John E. Woodruff,Sun Staff Writer

Even in the face of balmy weather that brought Baltimore Gas and Electric Co. customers welcome relief from high heating bills, aggressive cost-cutting enabled the utility to increase its earnings in the last three months of 1994.

Combined with last winter's harsh cold and June's searing heat, which inflated first-half earnings, the cost-cutting more than offset a 20-percent earnings drop-off in the critically important third quarter and enabled the company to report a 6 percent earnings gain for 1994.

The third quarter is usually the source of half or more of an electric utility's profits.

"BGE's senior management must be doing something right if they can show earnings improvements despite a cool July and August and a warm November and December," said Gary F. Hovis, an analyst for Argus Research of New York.

"What they're doing right is that they are on the right track with their cost-cutting program," he added.

The company reported that in the three months ended Dec. 31, earnings were $38.18 million, or about 26 cents a share, up 82 percent over the same quarter a year earlier, when the company took an $11 million write-off for an employee severance package that formed the heart of its cost-cutting program. In the same period of 1993, earnings were $20.94 million, or 14 cents a share, after taking an 8-cent-a-share charge for the severance program.

For 1994, earnings were $283.7 million, equivalent to $1.93 a share, compared with $268.02 million, or $1.85 a share the year before. In the third quarter of 1994, the company took a write-down of about $11 million for expenses of a generator it is deferring, so that each of the two years had an $11-million charge.

BGE stock closed at $23 yesterday, up 37.5 cents.

Operating and maintenance costs were down by $35 million for 1994, mainly due to a work-force reduction of about 1,100 employees, Arthur J. Slusark, a company spokesman, said.

Also contributing to earnings progress was increased production at Bethlehem Steel's Sparrows Point plant, where BGE has a new contract making the local utility the facility's sole supplier of electricity.

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