Constellation reports earnings of $68 million

BGE parent exceeds analysts' estimates

July 17, 1999|By Shanon D. Murray | Shanon D. Murray,SUN STAFF

Constellation Energy Group, parent of Baltimore Gas & Electric Co., yesterday reported earnings of $68 million, or 45 cents per share, for the second quarter, beating analysts expections.

The net income per share for the three months ended June 30 was 8 cents more than estimates by seven analysts surveyed by Zacks Investment Research.

The company's earnings were up 18 percent, from $57.4 million -- or 39 cents a share -- in the same period a year ago. Revenue rose 6.8 percent in the quarter, to $820 million.

Constellation also declared a quarterly dividend of 42 cents per share payable Oct. 1 to shareholders of record Sept. 10.

Company officials said increased transactions in its power-marketing and trading business, Constellation Power Source, strongly contributed to the company's healthy earnings.

Constellation set up the subsidiary, a joint venture with Goldman, Sachs & Co., in 1997 to sell energy and related services to other utilities and municipalities throughout the country.

Company officials have said Constellation will focus on power-marketing and generation to make up for revenue it may lose as Maryland deregulates its electric supply industry in July 2000.

"Our utility operation had earnings that were a little better than last year, but the power marketing side saw a significant change," said Kevin J. Miller, Constellation's financial planning manager. "We have a nice growth rate within Central Maryland, but our focus is to grow our business outside of Central Maryland."

Ronald S. Tanner, an analyst with Legg Mason Wood Walker in Baltimore, said 50 percent of Constellation's earnings growth came from its diversified businesses, although that part of the business contributed only 25 percent of the company's revenues.

"That's why diversified businesses are so important," Tanner said. "Earnings are even a little better than what I thought they would be."

He has an "outperform" rating on Constellation's stock, and plans to raise his earnings estimates for the company for 1999 and 2000.

Total electric sales to customers were up 2 percent during the first half of 1999 compared to the same period in 1998.

Sales to residential customers and commercial customers increased 4.8 percent and 2.2 percent, respectively, reflecting this year's colder winter weather, continued growth in the number of customers and an increase in electric usage per customer, Constellation said.

During the same period, electric sales to industrial customers decreased 5 percent, primarily because of a planned upgrade of a major industrial customer's facilities that temporarily reduced its electricity consumption, Constellation said.

Total gas sales for the first six months of 1999 were 6.7 percent above the same period in 1998, reflecting colder temperatures during the heating season.

Constellation's shares closed yesterday at $30.1875, up 18.75 cents.

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