Aug 7, 2007 2:21 pm US/Central
TXU Faults Cooler Weather For Plunging Profit
DALLAS (AP) ―
Electric utility TXU Corp. said Tuesday that its second-quarter profit plunged 76 percent due to cool weather that turned down demand for air conditioning and costs related to its pending sale to private investors.
TXU, which agreed in February to be bought by a group of private-equity investors for $32 billion, said earnings after dividends to preferred shareholders dropped to $121 million, or 26 cents per share, from $497 million, or $1.07 per share, a year earlier.
Excluding one-time costs and gains, TXU said its earnings fell to 93 cents per share from $1.40 per share a year ago.
Analysts surveyed by Thomson Financial had forecast $1.17 per share.
Revenue fell 24.2 percent, to $2.02 billion, far below analysts' forecast of $2.51 billion. Retail sales of electricity in TXU's home market of North Texas fell 30.6 percent.
TXU blamed the drop in profit on cooler weather, higher prices for coal used in power plants, a planned shutdown of its Comanche Peak nuclear plant, and lower average pricing. The investors buying the company pushed TXU to cut prices on some of its most expensive plans.
The buyers, led by Kohlberg Kravis Roberts & Co. and Texas Pacific Group, also forced TXU to drop plans for eight of 11 coal-fired power plants that the utility had hoped to build.
TXU took a charge against earnings of $54 million related to stopping work on eight coal plants. That was part of $320 million in one-time after-tax expenses that reduced profits by 69 cents per share, the company said.
TXU said it had a gain of $51 million, or 11 cents per share, from a deferred Texas tax benefit.
Shareholders are scheduled to vote Sept. 7 on the KKR-Texas Pacific offer of $69.25 per share. The Dallas-based company's largest shareholder, fund manager Franklin Resources Inc., has opposed the offer as too low.
TXU shares rose 15 cents, to $64.95 in afternoon trading.
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