PPL Corp. (PPL) posted second quarter 2010 earnings from continuing operations of 62 cents per share, missing the Zacks Consensus Estimate of 67 cents by 5 cents. However, the company’s quarterly profit recorded a solid rise of 94% from the year-ago earnings of 32 cents. The year-over-year increase in earnings was due to robust earnings at the company’s Supply segment.
Revenue
Net revenues in the quarter fell 10% to $1.5 billion compared to $1.7 billion in the year-ago period.
Segment Results
In the reported quarter, earnings from PPL’s Supply segment improved by 34 cents per share (378%) over the last year, while earnings from the Pennsylvania Delivery and the International Delivery businesses declined by 1 cent per share and 3 cents per share, or 20% and 17%, respectively.
The increase in Supply segment earnings was primarily due to significantly higher eastern base-load generation pricing, partially offset by higher operation & maintenance expense and higher depreciation.
Earnings decline at Pennsylvania Delivery business is attributed to higher operation & maintenance costs and a redemption premium on PPL Electric Utilities’ preferred stock, partially offset by higher transmission revenue.
International Delivery business’ results were affected by higher financing costs, higher U.K. income taxes, and higher operation & maintenance expenses, partially offset by higher electric delivery revenues and more favorable foreign currency effects.
Financials
As on June 30, 2010, the company had cash and cash equivalents of $4.5 billion and long-term debt of $8.7 billion.
During the quarter (late June), PPL raised roughly $3.5 billion from the sale of common stock and equity units to fund a major portion of the E.ON acquisition.
Outlook
PPL adjusted its forecasts for fiscal 2010 to reflect the issuance of common stock and equity units in late June. The company lowered its 2010 ongoing earnings guidance of $3.10 to $3.50 per share to $2.70-$3.05 per share. On a GAAP basis, the company now expects earnings in the $2.10-$2.45 per share range compared with the previous guidance of $2.82-$3.22 per share.
PPL also stated that it expects to complete the acquisition of E.ON U.S. LLC by late 2010, growing the size of its regulated businesses. The company believes that the acquired assets along with upside opportunities at the generation and marketing businesses, as energy market fundamentals improve, will increase shareholder value in the long term.
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