Edison Anticipates Period of Growth
Edison International on Wednesday forecast long-term profit growth of 8% to 12% a year, fueled by recent moves to trim debt and stronger results at its utility business.
Rosemead-based Edison, in a public filing and in a meeting with analysts in New York, raised its earnings forecast for 2004 by 3 cents a share. The parent of Southern California Edison also sees 2005 earnings topping expectations as it benefits from moves to cut back debt and expenses.
The company, which operates coal, oil and gas power plants in Pennsylvania, West Virginia, Illinois and Washington in addition to its Southern California utility, is selling off international assets and reducing debt.
Edison also said it planned to recommend a 2005 dividend of $1 a share to its board, up from its current annual dividend rate of 80 cents a share. The company aims to pay out 45% to 55% of its earnings, excluding those from its Mission Energy power plant unit.
“California’s regulatory and political environment has improved,” Chief Executive John Bryson said in the filing.
Bryson, in an interview with Reuters, said that Edison’s growth would probably be organic rather than through acquisitions.
“The utility is in an area that needs substantial new infrastructure investment, so we’re very focused on doing that well and it has the attribute of providing growth well beyond industry peers,” he said.
Bryson also noted that Southern California Edison was projected to invest about $11.3 billion in generation, transmission and distribution through 2009, if regulators approve that spending.
He said the company’s Mission Energy unit also may consider investing in new power plants in California.
Edison sees earnings per share in the range of $2.13 to $2.23 this year, up from its previous forecast of $2.10 to $2.20, citing improved performance at Southern California Edison.
Excluding one-time items, the company expects to report 2004 earnings in the range of $1.69 to $1.79 a share. On that basis, which excludes such items as a gain from a regulatory ruling, Edison was expected to earn $1.71 a share, the average estimate from 11 analysts surveyed by Thomson First Call. The midpoint of the new range would represent about a 27% decrease from last year’s earnings.
Edison forecast earnings of about $2.20 a share in 2005. Excluding nonrecurring items, it expects earnings to be about $2.14 a share, a 6.5% improvement over the average earnings estimate of analysts of $2.01 a share.
It sees a large earnings improvement at Mission Energy because of debt reduction as well as cuts to general and administrative expenses.
Bryson said the company’s recovery since the California power crisis was far along.
“We have the target capital structure that we assume will continue for the future at Southern California Edison ... and with the steps we’ve taken at the independent-power side of our business we’ve established reasonably clear survivability into the future,” he said.
Shares of Edison rose 55 cents to $28.30 on the New York Stock Exchange, their highest level since 2000. The stock has climbed 29% this year.
Edison is benefiting as California allows utilities to build plants to supply power to customers at regulated rates, rather than buy power from outside suppliers at fluctuating market prices. The state deregulated power sales six years ago, leading in 2000 and 2001 to rolling blackouts and a jump in electricity costs that bankrupted PG&E; Corp.’s Pacific Gas & Electric Co., California’s largest utility.
Bloomberg News and Reuters were used in compiling this report.
