Electric Utilities Companies Struggle to Show Profits
21 Março 2013 - 9:00AM
Marketwired
Utility sector had a rough ride in 2012. However, the segment seems
to be on the path to recovery in the current year, despite a demand
slump. The companies are looking to restructure their business in
order to curtail costs and boost their margins. Korea Electric
Power Corp. (NYSE: KEP) announced the appointment of the new CEO
and the company is taking steps to counter the impact of an
increase in input costs. On the other hand, TECO Energy Inc. (NYSE:
TE) still seems to be struggling as it widened its loss and
provided lower outlook. Overall, the sector looks to grow in 2013
with its bearish undertones intact.
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TECO Energy Inc.'s stock gained 4.83 percent in 2013. However,
it tumbled after its quarterly earnings announcement. The company
earned $45.1 million in net income for the fourth quarter of the
year, down from $53.2 million it had reported for the corresponding
quarter of the last year. On per share basis, TECO earned 21 cents
per share. The company's annual results also followed the trend and
its net income fell down to $212.7 million. The company also
provided bleak outlook for FY 2013 as it expects to earn in the
range of $0.90 and $1.00 in net income, lower than its 99 cents per
share net income for FY 2012.
TECO Energy also seems to be losing favor with institutional
investors. Moore Capital Management cut its stake in the company as
shown in its 13F filing. However, the company is looking to boost
its customer-base and may make a turnaround. Although, the electric
utility company lost 2.2 percent of its value in the past 52 weeks,
it sweetened the deal with 5.03 percent dividend yield. The company
is expected to keep up its dividend payment despite disappointing
results.
Elsewhere in the industry, Korea Electric Power Corp. recently
appointed its new CEO. The appointment of Cho Hwan Eik, a former
commerce Vice Minister, as its Chief Executive Officer also
signifies new a direction for the company. Cho is expected to focus
on a stable supply of electricity. The stock is up 34.41 percent up
in the past 52 weeks. However, it performed rather poorly in 2013,
losing 1.36 percent of its value.
Korea Electric is struggling with higher power purchase costs
and posted net loss of $2.77 billion for FY2012. It had incurred
$2.96 billion worth of net loss in the previous year. However, its
FY 2012 operating revenue was 13.7 percent up to $44.46 billion.
Korea Electric Power Corp. also improved its electricity sale
revenue to $41.36 billion. The figure represents 13.5 percent
increase.
Despite its weak results, the company still provides a good
investment opportunity as it is well positioned in its business
segment. Korea Electric is looking to neutralize the impact of
rising costs and the efforts are expected to bring about positive
results. It is also expanding its business overseas to counteract
the local market trends.
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