FPL Group profit rises 72 percent
BY EDWARD KLUMP
FPL Group, owner of Florida's largest utility, said second-quarter profit jumped 72 percent after gains in population expanded its customer base and earnings from competitive power sales surged.
Net income climbed to $405 million, or $1.01 a share, from $236 million, or 60 cents, a year earlier, Juno Beach, Florida- based FPL said Monday in a statement. Excluding a $58 million gain in the valuation of contracts that lock in energy prices, profit rose to 86 cents a share, FPL said, 6 cents higher than the average of nine analyst estimates compiled by Bloomberg.
Revenue rose 3.2 percent to $3.93 billion as power prices increased in competitive markets outside Florida, such as New England and Texas. The company raised its 2008 profit forecast to a range of $3.70 to $3.90 a share from an earlier target of $3.60 to $3.80, citing plans for additional growth in its wind power business, the largest in the United States.
''Given the fact that wind is the easiest type of renewable to build, it seems that FPL has an easy market for the next five years,'' said Daniele Seitz, an analyst at Dahlman Rose & Co. in New York.
FPL said it will add 1,000 megawatts of wind power capacity this year and another 1,000 in 2008. The company plans to build 1,500 to 2,000 megawatts in each of the following four years.
Shares of FPL rose $1.51, or 2.8 percent, to $56.43 at 10:03 a.m. in New York Stock Exchange composite trading. The stock has nine buy and nine hold ratings from analysts.
Gains in generation capacity outside of Florida and population growth helped FPL overcome the effects of mild weather in the second quarter.
The amount of wind spinning the company's turbines was the lowest in 13 years, and mild temperatures sapped demand for power to cool homes, Chief Executive Officer Lew Hay said in the statement. Weather conditions dragged profit down by more than $50 million, he said.
Florida added about three million residents in each of the past three decades. The state's population rose by more than 320,000 between July 2005 and July 2006, second only to Texas, according to the U.S. Census Bureau. FPL's Florida Power & Light utility added 95,000 accounts in the past year, increasing its customer base by 2.2 percent, the company said.
Excluding valuation adjustments to energy contracts, which FPL records each quarter to reflect current market prices, profit from power sales in competitive markets climbed 32 percent from a year earlier to $145 million, the company said.
Companywide, profit this year will be in the upper half of FPL's forecast range of $3.35 to $3.45, Hay said. That projection, which excludes items such as the valuation adjustments, compares with an average analyst estimate of $3.43.
The company targets 10 percent average annual growth in per-share profit through 2012, Chief Financial Officer Moray Dewhurst told investors on a conference call.
FPL has expanded by building wind farms and buying nuclear plants. The wind farms currently have 4,015 megawatts of capacity. One megawatt is enough power for 800 average U.S. homes, according to an Energy Department estimate.
Florida Power & Light provides electricity to about 4.4 million homes and businesses.