Blaming higher costs to produce electricity and other factors, Constellation Energy Group reported Friday that net income for the second quarter fell 24 percent to $93.1 million, or 52 cents per share from $121.7 million or 86 cents per share a year ago.
Earnings fell in the quarter despite a 27 percent jump in revenue to $4.42 billion from $3.48 billion for the second quarter in 2005. Earlier this year, company officials said they expected earnings for the quarter to reach between 30 cents and 45 cents per share.
“For nearly five years, we have consistently met or exceeded our quarterly earnings guidance,” said Constellation CEO Mayo A. Shattuck III, in a company statement.
“This steady performance is a credit to our proven business strategy and the resolve of our employees to remain squarely focused on delivering business results whether we face extreme market volatility, regulatory distraction or merger uncertainty.”
At 52 cents per share, the earnings beat the 47 cents per share estimates by investment analysts surveyed by Thomson Financial.
In New York Stock Exchange trading Friday, Wall Street responded favorably to the earnings report, sending the company?s share price up between 1 percent and 2 percent to more than $57.40 per share from a closing price of $56.80 per share a day earlier.
Cost increases also hampered profits from Baltimore Gas & Electric, a Constellation Energy subsidiary, according to the earnings report. Adjusted earnings for BGE fell to 11 cents per share for the quarter from 13 cents per share in the second quarter 2005, according to the earnings report.
BGE?s profits fell because of inflation and increased operating costs that did not keep pace with higher rates charged to customers, the company said.
Other factors affecting Constellation Energy earnings included costs related to the company?s proposed merger with FPL Group, a Florida-based utility, and losses from synthetic fuel processing.
Shattuck said Constellation Energy expects third-quarter earnings to reach $1.10 to $1.25 per share, which is lower than the $1.30 per share estimate of analysts surveyed by Thomson Financial.
CONSTELLATION
» On June 23, Constellation Energy and FPL Group filed a merger proxy with the Securities and Exchange Commission.
» Constellation Energy plans to sell six gas-fueled power plants in Illinois, Texas, California, Virginia and West Virginia to reduce debt, the company reported.
» The Maryland Public Service Commission plans an Aug. 9 public hearing on the planned Constellation Energy and FPL Group merger, the company stated.
