ENP Newswire - 30 July 2014
Release date- 29072014 - CALGARY, ALBERTA - ATCO Ltd. (TSX: ACO.X) (TSX: ACO.Y) today reported second quarter adjusted earnings of $57 million in 2014 compared to $89 million in 2013.
Adjusted earnings were $172 million for the six months ended June 30, 2014 compared to $209 million for the same period of 2013. Major drivers of this decrease were unfavourable market conditions in the Company's power generation business, an Alberta Utilities Commission (AUC) decision received by the Utilities in the second quarter and reduced earnings from ATCO Structures & Logistics.
The decrease in earnings in ATCO Power was primarily due to a 66% decline in the average Alberta Power Pool price in the second quarter of 2014 over the same period in 2013 and higher natural gas input costs. Also contributing to the decrease were higher business development costs to pursue power generation opportunities and the launch of ATCO Power's recently announced commercial and industrial sales program.
The decrease in earnings was also impacted by the AUC decision for information technology (IT) in the second quarter of 2014. The decision covers an unusually long period from the start of 2010 to the end of 2014. It reduced the Company's adjusted earnings in the second quarter by $14 million, of which only $1 million related to the second quarter of 2014, and $13 million related to prior periods.
The Utilities continued to invest in electricity and natural gas transmission and distribution facilities to support growth in the province and replace aging infrastructure. ATCO Electric, ATCO Gas and ATCO Pipelines collectively invested $501 million in the second quarter, bringing the total for the first half of 2014 to $1 billion.
ATCO Structures & Logistics' second quarter earnings were lower than the same period last year. The earnings for this company are significantly influenced by the cyclical nature of large natural resource project activity. Reduced manufacturing activity and profit margins, combined with lower utilization and reduced rental rates and expiry of a logistics and facility services contract, resulted in lower earnings.
Earnings attributable to Class I and Class II Shares were $66 million for the quarter ended June 30, 2014 compared to $98 million in the same period of 2013. Earnings attributable to Class I and Class II Shares were $193 million for the six months ended June 30, 2014 compared to $215 million in the same period of 2013.
ATCO declared a third quarter dividend for 2014 of 21.5 cents per Class I Non-Voting and Class II Voting Share. ATCO's annual dividend per share has increased for 21 consecutive years.
The Company announced it has competitively outsourced its information technology (IT) services to Wipro Ltd. (Wipro), a global IT, consulting and business process services company. Wipro will provide the Company with a complete suite of IT services. Wipro will also acquire the shares of ATCO I-Tek and the assets of ATCO I-Tek Australia. The sale is expected to close in the third quarter of 2014 subject to customary closing conditions.
The increase in revenues in the second quarter and the first six months of 2014 was due primarily to increased rate base in the Utilities segment, and higher recoveries from customers related to colder weather and increased recoverable costs.
The $79 million decrease in funds generated by operations for the second quarter was due primarily to lower earnings and lower contributions from utility customers, while year-to-date funds generated by operations increased overall due to higher contributions received from customers in the first quarter for utility capital expenditures.
ATCO's consolidated financial statements and management's discussion and analysis for the three and six months ended June 30, 2014, will be available on the ATCO website (www.atco.com), via SEDAR (www.sedar.com) or can be requested from the Company.
ATCO Ltd., with more than 9,800 employees and assets of approximately $17 billion, delivers service excellence and innovative business solutions worldwide with leading companies engaged in Structures & Logistics (manufacturing, logistics and noise abatement), Utilities (pipelines, natural gas and electricity transmission and distribution), Energy (power generation, natural gas gathering, processing, storage and liquids extraction) and Technologies (business systems solutions).
Certain statements contained in this news release may constitute forward-looking information. Forward-looking information is often, but not always, identified by the use of words such as 'anticipate', 'plan', 'estimate', 'expect', 'may', 'will', 'intend', 'should', and similar expressions. Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information.
The Company believes that the expectations reflected in the forward-looking information are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking information should not be unduly relied upon.
Any forward-looking information contained in this news release represents the Company's expectations as of the date hereof, and is subject to change after such date. The Company disclaims any intention or obligation to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required by applicable securities legislation.
B.R. (Brian) Bale
Senior Vice President
Tel: (403) 292-7502