Dominion Resources Inc.’s (D) second-quarter operating earnings per share of 72 cents came way ahead of the Zacks Consensus Estimate of 67 cents and prior-year earnings of 68 cents. Operating earnings increased 5.4% year over year to $426 million.
Dominion’s GAAP net income was $1.76 billion or $2.98 per share, as compared with $454 million or 76 cents per share in the year-ago period. GAAP net income includes various one-time after-tax items.
However, Dominion’s total revenue declined 2.1% year over year to $3.33 billion, primarily due to weak performance of Dominion Energy and Corporate and other segments. Operating income for Dominion Energy decreased 16% year over year to $86 million. While Corporate and other reported a loss of $48 million against $50 million in the year-ago quarter, Dominion Virginia Power increased 30% year over year to $112 million and Dominion Generation climbed 6% year over year to $276 million, during the reported quarter.
While the company’s strategy of strengthening infrastructure is boding well, results have been benefited from higher contributions from the regulated electric utility business including favorable weather in the regulated electric service territory, higher FERC transmission and rate adjustment clause revenue, along with lower interest and operating expenses. However, these were partially offset by lower merchant generation margins, lower contributions from producer services and the absence of earnings from the company’s E&P divestiture that began on May 1, 2010.
Outlook for 2010
Dominion management has also provided its guidance for the third quarter and full-year 2010. For the third quarter, the company anticipates operating earnings to be in the range of 99 cents to $1.04 per share, against $1.00 per share reported in the third quarter of 2009.
For full-year 2010, Dominion projects that the sale of substantially all of its Appalachian E&P operations will result in an after-tax gain of approximately $1.4 billion. The implementation of a work-force reduction program, the impairment of a merchant generation asset, the sale of Peoples Gas and the elimination of certain tax deductions associated with health care legislation changes will result in a net after-tax loss of approximately $500 million. However, these items are not expected to be included in earnings results of 2010.
Dividend Update
On July 21, the board of Dominion declared a quarterly dividend of 45.75 cents per share on its common stock, to be paid on September 20, 2010 to the shareholders of record as on August 27, 2010.
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