Xcel Energy Inc., owner of utilities in Denver and Minneapolis, had lower-than-expected profit because of higher nuclear power-plant operating costs and reduced earnings from wholesale electricity sales.
Net income fell 21 percent to $119.7 million, or 28 cents a share, from $151.3 million, or 36 cents, in the year-ago period, the Minneapolis-based company said today in a statement. Sales dropped to $2.76 billion from $2.89 billion.
Xcel during the quarter had $18 million in higher costs related to refueling of its nuclear plants. The company in recent quarters has also had less excess electricity to sell on wholesale markets because it is adding retail customers.
“It’s a slow start” to the year, said David Parker, an analyst with Robert W. Baird & Co. in Tampa, Fla., who rates the shares “neutral” and owns none. “Nuclear outages definitely pressured” the results.
He had expected Xcel to earn 40 cents a share. The average of three analyst estimates compiled by Bloomberg was 36 cents. Some of the weakness in earnings was related to “timing” issues that won’t be repeated in subsequent quarters this year, Parker said.
“While we’re slightly behind for the quarter, we’re on track to deliver earnings within our 2007 guidance range,” Chief Financial Officer Ben Fowke said in a conference call with analysts. The company’s nuclear-related costs over the last three-quarters of the year are expected to be $17 million lower than the same period last year, he said.
Xcel repeated its forecast for annual profits this year in the range of $1.35 a share to $1.45 a share. It earned $1.36 in 2006.
The company lowered its forecast for sales growth to a range of 1.4 percent to 2 percent, from an earlier forecast of 1.7 percent to 2.2 percent.
Xcel, which gets about 85 percent of its profit from Colorado and Minnesota, also provides service in states such as Wisconsin, New Mexico and Texas. The company provides electricity to about 3.3 million customers and gas to about 1.8 million.
The company earlier this year said it is developing gas pipelines and storage facilities in Colorado with El Paso Corp. Xcel also plans to build a $210 million wind power facility in Minnesota.
In the first quarter, operating and maintenance expenses rose $26 million compared with the same period a year earlier, driven by the increase in nuclear-related costs, the company said. Short-term wholesale and commodity trading margins decreased approximately $15 million in the quarter.
Xcel has two nuclear plants that can generate 1,700 megawatts of electricity along with 14 coal-fired plants and 18 facilities that burn natural gas. One megawatt is enough for about 800 U.S. homes.
The company has been raising rates and investing more on its electricity and natural gas infrastructure after shedding telecommunications and construction units. Xcel increased electricity rates in Colorado by $151 million at the start of this year and is seeking regulatory approval for higher gas prices in Colorado, Minnesota and North Dakota.
Xcel raised gas rates in Minnesota by $15.9 million earlier this year, subject to a refund, as state regulators consider its price structure.
