Edison Raises Outlook for 2005
Edison International on Tuesday reported better-than-expected second-quarter profit and boosted its 2005 earnings estimate by about 20% on the strength of European investment gains and higher prices at its independent power company.
Net income was $201 million, or 61 cents a share. That was a reversal from a loss of $374 million, or $1.15 a share, a year earlier, when a contract cancellation hurt profit.
Excluding discontinued operations, earnings were 55 cents a share in the latest quarter, which beat analysts’ consensus estimate of 51 cents, according to a survey by Thomson Financial. Sales rose 3.3% to $2.65 billion.
The Rosemead company also said its Southern California Edison utility signed a 20-year solar-power contract that would jump-start an Arizona firm’s plans to build the world’s largest solar generating facility on a site northeast of Los Angeles.
If the SoCal Edison agreement to buy power generated by the facility wins approval from the state Public Utilities Commission, Stirling Energy Systems will build a test station within 18 months using dish technology designed to produce power more cheaply than other solar facilities.
Stirling plans to build a 20,000-dish solar array near Victorville that could be online in 2008 and provide enough electricity to serve 278,000 homes for a year, said Edison Chief Executive John Bryson.
“In the event that this works, it is a considerable breakthrough,” Bryson said. “It is a very good fit in Southern California, because our peak demand is when the sun shines strongest.”
Earlier in the day, the spotlight was primarily on Edison’s Mission Energy Holding and Edison Capital subsidiaries, which were the drivers behind the company’s increase in 2005 earnings guidance to $2.53 to $2.63 a share, up from $2.14. That was more in line with Wall Street analysts’ current average forecast of $2.52.
Mission Energy, an unregulated unit that sells power in Illinois and other markets, has been posting higher-than-forecast earnings because of an uptick in wholesale electricity prices. Edison raised 2005 earnings estimates for that company by about 75% on Tuesday, to 55 cents to 65 cents a share.
Profit at Edison Capital, a financing unit, beat expectations in the second quarter because of extra income from European investments. Edison said 2005 results at that unit would be 28 cents a share, more than triple earlier estimates.
Edison’s second-quarter results were “a little better than expected,” said Doug Fischer, an analyst at A.G. Edwards & Co. He noted, however, that the extra income for the quarter was “the type of earnings that really aren’t all that repeatable.”
“We’re very proud of these earnings,” Bryson said. He said operating income rose at all three Edison subsidiaries, including at SoCal Edison, where profit of 49 cents a share was 11 cents above results in last year’s second quarter, excluding special regulatory items that increased the 2004 results.
SoCal Edison’s revenue rose 1.2% in the quarter and accounted for more than 83% of the parent company’s total revenue.
Edison’s stock rose as high as $41.26 early Tuesday on the earnings news, but fell back to close down 17 cents at $40. The stock is up 25% year to date, outpacing the Dow utility stock index, which is up 17.2%.
