Wisconsin Energy Corp. on Wednesday reported no growth in net income in the second quarter, but a share buyback helped nudge earnings per share a penny higher than last year.
Results at the parent company of We Energies were higher than company projections from three months ago as well as analysts' forecasts. Analysts had been expecting an earnings decline, given hot weather last year that led to heavy air conditioning and energy use.
"The earnings were better than I thought they'd be," said Dave Parker, a utility analyst at Robert W. Baird & Co. in Florida. The utility is effective at cutting operating costs at a time when it's been investing heavily in projects to upgrade infrastructure, he said.
Higher income from the utility's new coal-fired power plant in Oak Creek, as well as a rate increase that went into effect in January for We Energies customers, helped offset the effects of cool weather to keep income from falling in the quarter.
Net income was $119 million, or 52 cents a share, compared with $119.3 million, or 51 cents, in last year's second quarter.
Sales were $1.01 billion, up 7.2% from a year ago, as natural gas sales were up 30% from a year ago.
"Strong natural gas sales during a cooler-than-normal spring and the impact of the company's share repurchase program were positive factors contributing to our solid results for this year's second quarter," said Gale Klappa, chairman and chief executive, in a statement. "A cool June, however, significantly reduced demand for air conditioning across the region."
That, in turn, reduced demand for electricity. Residential use of electricity dropped by 6.9%, with consumption by small commercial and industrial customers dropping 1.4%.
Overall retail sales fell 5.5%, but adjusted for the weather, were off 2.2%. Excluding the company's largest customer, a pair of mines operated by Cliff Resources Inc. in Michigan's Upper Peninsula, retail electricity consumption fell 0.4%.
For We Energies, large customer demand excluding the mines fell 4.1%, or 2.1% when adjusted for the weather. In an interview, Klappa said weak demand from large customers had been expected and was consistent with the utility's forecasts.
"We had planned for a sluggish economy in the second quarter," he said. "Despite a number of statistics that are moving in the right direction for the Wisconsin economy, that's exactly what we saw ? a sluggish second quarter."
During an investor conference call, Wisconsin Energy announced that earnings in the third quarter are expected to be down from last year, in part because of record heat last year that boosted earnings by 6 cents a share.
The utility is forecasting earnings of 52 to 56 cents a share, compared with 67 cents in last year's third quarter, with 2013 earnings now forecast at $2.41 to $2.48 per share.
Wisconsin Energy's stock closed down 18 cents Wednesday at $43.48. The shares are up 15% so far this year.
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Source: http://www.jsonline.com/business/buyback-helps-wisconsin-energy-earnings-b9965991z1-217850821.html