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Emera Q1 Earnings Rebound To $54.7 Million
Higher Sales and Strong Gas Prices Fuel Increase
HALIFAX, Nova Scotia, April 24, 2003, (TSX:EMA): Emera Inc.'s consolidated net earnings increased to $54.7 million in Q1 2003, compared to $33.6 million in Q1 2002. Quarterly earnings per share were $0.51 compared to $0.34 in 2002, including the $0.05 dilutive impact of a common equity issue late in 2002.
"Our goal in 2003 is to restore Emera's earnings after a tough 2002. We're off to a strong start," said David Mann, Emera's President and Chief Executive Officer.
The company's largest subsidiary, Nova Scotia Power drove the earnings increase. NSPI's electricity revenues were $24.4 million higher year over year, reflecting a 6% increase in sales volumes due to colder temperatures. An average 3% rate increase implemented late in 2002 also contributed to sales growth.
In Q1, 2003, NSPI sold a substantial portion of its natural gas supply, to capitalize on high prices for that commodity. The gas sales, net of the incremental cost of the alternative oil-fired generation, served to reduce fuel costs by $19.3 million.
The benefits of higher sales and lower fuel costs were partially offset by a $19.5 million increase in corporate income taxes in NSPI, which had previously minimized corporate income taxes through utilization of available capital cost allowance.
"Gas prices have really worked in our favor so far in 2003," said Mr. Mann. "Selling gas reduced our overall fuel costs, and enabled NSPI to absorb a substantial increase in its tax expense in the first quarter. Over the longer term, we need to cover significant increases in corporate income taxes in our rate structure, and we will be addressing that in our next rate filing."
Bangor Hydro, Emera's electricity transmission and distribution utility in Maine, contributed $6.9 million to net earnings in Q1, 2003, an increase of $2.2 million over the prior year. Operating expenses were $3.3 million lower year over year, largely due to a staff restructuring in mid 2002.
Emera Energy's Q1 operating results were consistent year over year, with earnings before interest and taxes of $4.8 million in 2003, compared to $4.6 million in 2002. The financial impact of a staff restructuring in January of this year was minimal in Q1.
Consolidated operating cash flow was $79.1 million, up 10% from $71.9 million in the first quarter of 2002.
Corporate Developments
On March 6, 2003, Standard & Poor's (S&P) placed 15 Canadian utilities, including Emera, on credit watch with a negative outlook, pending a review of regulatory environments. S&P currently rates Emera's long-term debt at BBB, and Nova Scotia Power's at BBB+.
On April 3, 2003, the Province of Nova Scotia increased NSPI's provincial taxes by $4.6 million, effective January 31, 2004.
On April 24, 2003, Moody's Investors Service assigned first time ratings to Emera Inc. and Nova Scotia Power Inc. Emera's senior unsecured debt was rated Baa2, and Nova Scotia Power's was rated Baa1. Ratings outlooks for both companies are stable.
About Emera Inc.
Emera Inc. (EMA-TSX) is a diversified energy and services company, with 550,000 customers and $4.0 billion in assets. The company has two wholly-owned regulated electric utility subsidiaries, Nova Scotia Power Inc. and Bangor Hydro-Electric Company. Nova Scotia Power supplies over 95% of the electric generation, transmission and distribution in Nova Scotia. Bangor Hydro provides electricity transmission and distribution service to 107,000 customers in eastern Maine. It is a member of the New England Power Pool, and is interconnected with the other New England utilities to the south and with New Brunswick Power to the north. In addition, Emera Energy manages Emera's growing gas infrastructure investment portfolio, including its 12.5% interest in the Maritimes & Northeast Pipeline, which delivers Sable natural gas to markets in Maritime Canada and the northeastern United States; and an 8.4% interest in the Sable Offshore Energy Project offshore platforms and sub-sea field gathering lines. Emera Energy also incorporates Emera Energy Services, Emera Fuels, and Emera's business development activities.
Conference Call
Emera is holding a teleconference today at 5:00 pm Atlantic (4:00 pm Toronto/Montreal/New York; 3:00 pm Winnipeg; 1:00 pm Vancouver) to discuss the Q1 2003 financial results. Analysts and other interested parties wanting to participate in the call should dial 1-800-814-4860 (in Toronto 416-640-4127) at least 10 minutes prior to the start of the call. No pass code is required. The teleconference will be recorded. If you are unable to join the teleconference live, you can dial for playback at 416-640-1917, passcode # 242743 or toll-free at 877-289-8525, passcode # 242743 (available until midnight Monday, April 28, 2003). The teleconference will also be webcast live by Q1234.com and CNW and will be available for playback in the Q1234 and CNW archives.
Forward Looking Information
This news release contains forward looking information. Actual future results may differ materially. Additional financial and operational information is filed electronically with various securities commissions in Canada through the System for Electronic Document Analysis and Retrieval (SEDAR).