Nicor Inc. (GAS) reported marginally weaker-than-expected first quarter 2010 results, as its shipping business swung to a loss. Earnings per share came in at $1.33, a penny below the Zacks Consensus Estimate.
 
However, comparisons (for the reported quarter) with the year-earlier period were favorable, reflecting improved operating income in the company’s gas distribution and other energy-related businesses. Nicor’s earnings per share jumped approximately 38.5% (from 96 cents to $1.33), while revenues increased 7.4% to $1.2 billion.
 
Gas Distribution
 
The segment operating income for the most recent quarter was $93.2 million, a healthy increase from the $53.8 million achieved during the first quarter of 2009. The positive comparison can be attributed to higher gas distribution margin (on the back of base rate hike, higher revenue from the energy efficiency, and bad debt cost recovery) in tandem with lower operating and maintenance costs.
 
Early last year, Nicor got the nod from Illinois regulators (the company’s operations are centered in northern Illinois) to increase rates by approximately $69 million. During the fourth quarter of 2009, Nicor got clearance for an additional $11 million hike, which further helped the company’s gas-distribution business.
 
Shipping
 
Nicor’s Shipping segment swung to an operating loss of $500,000 versus income of 6.6 million in the year-earlier period. The main reasons for the underperformance were lower operating revenues and higher operating costs. The decline in operating revenues were mainly due to lower average rates, while increased operating expenses were primarily attributable to higher transportation-related costs as well as increase in repairs and maintenance expense, partially offset by lower charter costs.
 
Other Energy Ventures
 
Operating profit came in at $4.4 million, up $1.8 million year over year. The increase came on the back of higher operating income in the company’s retail energy-related products and services businesses, somewhat canceled by lower operating income at Nicor’s wholesale natural gas marketing business.
 
Guidance
 
For 2010, Nicor maintained its earnings per share guidance of $3.10 – $3.30.

(We are reissuing this article to correct a mistake. The original article, issued earlier today, should no longer be relied upon.)
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