PG&E;’s Profit Rises 26% as Sales Surge
PG&E; Corp., owner of California’s largest utility, said third-quarter earnings rose a better-than-expected 26% as it sold more electricity across the U.S. and shed unprofitable businesses.
Profit from continuing operations increased to $248 million, or 68 cents a share, from $197 million, or 53 cents, a year earlier, as sales rose 21% to $7.5 billion. The average estimate of analysts surveyed by First Call/Thomson Financial was 60 cents.
San Francisco-based PG&E; said its Pacific Gas & Electric unit has accumulated about $2.9 billion in uncollected costs since June. The utility paid as much as five times more for power during this year’s hottest months as it did last year, PG&E; said.
The costs do not immediately reduce earnings because “they are being tracked in an account for future recovery,” PG&E; said.
The California Public Utilities Commission said last week it would consider the utility’s request to pass on costs to customers.
PG&E;’s National Energy Group unit operates 30 power plants in 10 states, seeking to tap rising demand for electricity. To help finance its power plant investments, PG&E; this year sold its money-losing energy-services unit and Texas natural gas operations.
The company said it is on track to exceed its target of increasing earnings per share by 8% to 10% this year.
Last week, Pacific Gas & Electric won approval from state regulators to issue $1.4 billion in short-term debt to finance power purchases.
PG&E;’s electric utility cannot currently pass on this year’s high power costs to customers because, under California’s deregulation laws, the price they pay for electricity is frozen temporarily.
In the quarter, PG&E; reported a loss of $19 million, or 5 cents a share, from the energy-services unit it sold, and took a charge of $4 million, or a penny a share, for restructuring costs, resulting in net income of $225 million, or 62 cents.
A year earlier, a loss of $12 million, or 3 cents, from the energy-services unit brought net income to $185 million, or 50 cents.
PG&E; shares rose 13 cents to close at $29.19 on the New York Stock Exchange.
At a Glance
Other California company earnings, excluding one-time gains or charges unless noted, include:
* Avery Dennison Corp. said third-quarter net income rose 10.6% to $73 million, or 73 cents a share, as sales rose 4.2% to a record $1 billion. The Pasadena-based company said that excluding the impact of the weaker euro against the dollar, earnings were 75 cents and sales were up 7.7%.
* Imperial Bancorp said net income jumped 59% to $23.2 million, or 51 cents a share. Excluding the results of its 50%-owned Official Payments Corp., a provider of electronic payment options to government entities, net income was $25.3 million, or 56 cents a share, up from $15.2 million, or 33 cents, a year earlier. Net interest income increased rose 31%.
* McKesson HBOC Inc. reported a 4% decline in fiscal second-quarter earnings to $61.4 million, or 22 cents a share, a penny short of Wall Street estimates, amid lower sales and an operating loss at its online health-care services unit.
The San Francisco-based company said revenue including sales to customers’ warehouses grew 11% to $9.9 billion, while revenue excluding sales to customers’ warehouses rose 10% to $6.8 billion.
* THQ Inc., a developer of video games, said earnings fell 49% to $2.4 million, or 12 cents a share, but beat expectations of 8 cents. The Calabasas Hills-based company said revenue grew 20% to $53.3 million. The company said it expects strong holiday sales.
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California Preview
A sampling of companies expected to report today, ranked by year-over-year earnings-per-share (EPS) growth, compiled by First Call/Thomson Financial.
Expected Today
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Ticker Analysts’ Year-ago Predicted Company symbol estimated EPS quarter Unocal UCL $0.93 $0.18 VeriSign VRSN 0.06 0.02 Newgen Results NWGN 0.19 0.11 Rainbow Technologies RNBO 0.15 0.09 Syncor International SCOR 0.22 0.17 WellPoint Health Networks WLP 1.30 1.11 Franklin Resources BEN 0.58 0.52 Clorox CLX 0.41 0.37 Hilton Hotels HLT 0.16 0.15 Chiron CHIR 0.17 0.17 Callaway Golf ELY 0.25 0.25 Cypress Biosciences CYPB -0.05 -0.05 Fidelity National Financial FNF 0.47 0.60 NBCi NBCI -1.00 -1.07 Maxtor MXTR -0.12 -0.51
Ticker Company pct. chg. Unocal +417% VeriSign +200 Newgen Results +73 Rainbow Technologies +67 Syncor International +29 WellPoint Health Networks +17 Franklin Resources +12 Clorox +11 Hilton Hotels +7 Chiron 0 Callaway Golf 0 Cypress Biosciences 0 Fidelity National Financial -22 NBCi NM Maxtor NM
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Notes: NM = not meaningful. A loss in any period makes percentage change not calculable.
Year-over-year growth and percentage changes are based on earnings-per-share figures and may differ from percentage changes based on total profit.
For more information on First Call, check https://www.firstcall.com.
