) announced fourth-quarter 2012 pro forma earnings of 49 cents
per share, beating the Zacks Consensus Estimate by 3 cents.
However, quarterly earnings were 31% lower than the year-ago
The earnings underperformance was due to year-over-year declines
of 50% and 74.1% in the
segments' earnings, respectively. These were partially offset by
the 33.3% year-over-year rise in the
segment's earnings and a 3.6% yearly increase in the earnings of
GAAP earnings during the quarter were 60 cents versus 78 cents in
the year-ago quarter. The difference between GAAP and pro forma
earnings of 11 cents were due to a gain of 2 cents related to
adjusted energy-related economic activity and another 13 cents
gain from line loss adjustments; partially offset by a penny's
loss from foreign currency-related economic hedges and 3 cents
charge from asset impairment.
For full-year 2012, PPL Corp. reported pro forma earnings of
$2.42 per share, outperforming the Zacks Consensus Estimate of
$2.37 but 11% lower than the year-ago figure.
Yearly GAAP earnings per share were $2.60 compared with $2.70 a
year-ago. The variance between GAAP and pro forma earnings was
due to a one-time gain of 18 cents.
The company reported fourth quarter total revenue of $3.2
billion, beating the Zacks Consensus Estimate by $0.76 billion.
However, quarterly revenue decreased 23.6% year over year due to
lower realized and unrealized wholesale energy marketing
PPL Corp.'s full-year 2012 total revenue was $12.3 billion, 8.6%
higher than the Zacks Consensus Estimate. But, reported revenue
was down 3.5% from the year-ago figure.
Operating expenses in the reported quarter were $2.4 billion
versus $3.3 billion in the year-ago quarter.
In the quarter under review, operating income was $0.8 billion
compared with $0.9 billion a year-ago.
Interest expenses for this quarter were $247 million, up 21.4%
year over year due to the higher debt level.
As of Dec 31, 2012, the company had cash and cash equivalents of
$0.9 billion versus $1.2 billion as of Dec 31, 2011.
Long-term debt at the year-end was $18.7 billion compared with
$18 billion at the end of 2011.
Net cash provided by operating activities was $2.7 billion in
2012 versus $2.5 billion a year-ago.
PPL Corp. projected full-year 2013 earnings in the range of $2.25
- $2.50 per share. The company expects 85% of the earnings to be
generated from its regulated business, up from a 72% contribution
Earnings in 2013 are expected to decline from the 2012 level due
to lower energy margins from the company's supply businesses and
planned outage at the Susquehanna nuclear power plant in
Pennsylvania; partially offset by higher revenue from its 3
We appreciate the initiatives taken by PPL Corp. to augment
shareholder value by increasing the quarterly dividend. The
company decided to hike the quarterly dividend by 2.1% year over
year to 36.75 cents, payable on Apr 1, 2013, to shareowners of
record as of Mar 8, 2013.
We view PPL Corp. as an organization with a well diversified
asset portfolio with strong business models, which are adaptable
to a wide range of market coverage. In addition, the company
expects to achieve a stable, long-term growth from its regulated
electricity delivery businesses through electric and gas base
rate hikes in its Kentucky Regulated segment, improvement in
operational efficiency and a strong customer-base.
However, we are concerned about the impacts of stringent
regulations, and risks associated with delay and cancellation of
several important projects, which may to some extent mitigate the
company's future growth.
PPL Corp. currently has a Zacks Rank #3 (Hold).
Allentown, Pennsylvania-based PPL Corp. generates and delivers
electricity and natural gas to more than 10 million customers in
the U.S. and UK. Other players from the sector -
The AES Corporation
) - have yet to announce their quarterly results.
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