Allegheny Energy profit declines

Warm weather cools first-quarter earnings, from 93 cents a share to 71 cents

May 03, 2002|By Dan Thanh Dang | Dan Thanh Dang,SUN STAFF

Allegheny Energy Inc. said yesterday that warm weather and lower energy prices helped push down first-quarter earnings.

In the three months that ended March 31, the Hagerstown utility reported income before special items of $89.7 million, down from $102.8 million in the corresponding period last year.

Net income, including a gain from a land sale, was $101.6 million, up from $71.7 million, including the effect of an accounting change, in the year-earlier quarter.

Earnings were 71 cents a share, down from 93 cents, excluding the one-time items. Including those items, net earnings per share were 81 cents this year, up from 65 cents in 2001. This year's results also reflected the issuance of 14.8 million new shares.

First-quarter revenue was $2.3 billion, up from $1.7 billion a year earlier, bolstered by sales gains in the company's unregulated businesses.

An $11.9 million after-tax gain on the sale of land in West Virginia's Canaan Valley to the U.S. Fish and Wildlife Service in February helped offset some of the adverse conditions, said Alan J. Noia, Allegheny's chairman, president and chief executive. The land sale added 10 cents to earnings per share in the first quarter.

"The first several months of 2002 were challenging for those of us in the energy industry, with much milder than average weather and lower energy sales, a relatively weak wholesale market, and a lackluster economy," Noia said after the stock market closed. "Allegheny Energy remains optimistic that our integrated strategy will continue to produce positive results for shareholders.

"Our energy delivery business, with its stable earnings and cash flow, combined with our risk management, trading and marketing business, which is backed by a national network of generating assets, remains the right combination for continued growth in the future."

The economy and volatile conditions within the energy industry also ended Allegheny's plan to split into two publicly traded businesses this year and forced the company to cut 2001 earnings forecasts in December.

Daniele M. Seitz, an energy analyst at Salomon Smith Barney, said in a recent report on Allegheny that, "We anticipate that the stock will do better next year. ... "

Shares of Allegheny dropped 4 cents on the New York Stock Exchange yesterday to close at $41.52.

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