Entergy Had $400.9 Million Profit in First Quarter After Year-Earlier Loss

Resumen de Prensa            Enervía, martes, 29 abril 2003

FUENTE: Bloomberg


Entergy Corp., owner of utilities in four U.S. Southeast states, had a profit of $400.9 million in the first quarter after an accounting change and a boost from an energy-trading venture with Koch Industries Inc.

Net income was $1.73 a share after payment of preferred dividends, compared with a loss of $73 million, or 36 cents, in the year-earlier period, the company said in a statement. Revenue rose 9.5 percent to $2.04 billion. Profit was increased by 61 cents a share because of a change in the way Entergy accounts for the expected costs of retiring nuclear plants.

Entergy-Koch has been one of few traders to profit in the past year and increase sales. Rivals including Dynegy Inc., Williams Cos. and Aquila Inc. have announced plans to exit the business after large losses last year led to cuts in their debt ratings to junk status.

``Entergy continues to buck the trend, especially in energy trading,'' said Argus Research analyst Jeffrey Gildersleeve, who rates the company ``hold'' and doesn't own the shares. ``The question is whether that's a sustainable trend. The trading business is very difficult to predict.''

The shares of New Orleans-based Entergy fell 61 cents to $47.47 in New York Stock Exchange composite trading. They have gained 4.1 percent this year. The stock last year increased 17 percent, the biggest gain in the 24-company Standard & Poor's 500 Electric Utilities Index, which dropped 19 percent.

Profit from Entergy's commodity-services unit, which includes its share of earnings from Entergy-Koch, was 41 cents a share in the first quarter, compared with a loss of 96 cents a year earlier.

Gas Swings

Results at Entergy-Koch Trading were driven partly by wider swings in U.S. natural-gas prices, the statement said.

The average price of gas on the New York Mercantile Exchange more than doubled in the quarter from the year-earlier period. It reached a record $11.899 per million British thermal units in late February after touching $4.85 per million Btu in early January.

Excluding the accounting change, Entergy's profit in the first quarter was $1.12 a share. The company was projected to make $1.05, the average estimate of analysts surveyed by Thomson Financial.

Entergy owns utilities in Louisiana, Arkansas, Mississippi and Texas. Volume sales of electricity gained 3.5 percent.

Year-Earlier Loss

Entergy's loss in the first quarter of 2002 was mostly related to $260.9 million of one-time costs to write down unregulated power plants whose market value had fallen and to cancel orders for turbines.

Entergy's revenue in the first quarter of 2002 was $1.86 billion.

Wichita, Kansas-based Koch, the second-biggest closely held U.S. company behind Cargill Inc., has oil-refining and pipeline businesses and chemical and agricultural units.

Enron Corp.'s December 2001 bankruptcy prompted Standard & Poor's, Moody's Investors Service and Fitch Ratings to increase scrutiny of energy companies that derived a large share of earnings from trading. Subsequent credit downgrades forced many of them to post collateral with trading partners, creating a cash crunch that brought Dynegy and Williams Cos. close to insolvency.

Entergy's credit rating has remained investment grade partly because the company gets most of its earnings from its regulated utilities, which have a combined 2.6 million customers, according to S&P.

Credit Ratings

Koch's rating is AA+, the second-highest investment grade, and Entergy credit is BBB, two levels above junk status, according to S&P.

Entergy-Koch faces probes from federal regulators over alleged use of phony trades.

A March 26 staff report from the Federal Energy Regulatory Commission said that Entergy-Koch was the biggest user of ``wash trades'' for gas bought and sold on Enron's Web site, EnronOnline. Such trades involve simultaneous buy and sell orders at the same price and quantity and can be used to inflate revenue and prices.

Entergy said this month it is being investigated for the trades by the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission.