Infrastructure
FirstEnergy Reports Falling Demand (FE, AEP)
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FirstEnergy Corporation (NYSE:FE) reported 2008 EPS of $4.38, higher than anticipated EPS of $4.33. Revenue for the year also beat expectations, coming in at $14.6 billion compared with average estimates of $14.51 billion. What may be more interesting than the earnings is the trends in usage.
The company saw an overall decrease in electricity sales of 2.5% from 2007 to 2008. In the fourth quarter, retail sales dropped 4.8% and wholesale sales dropped 3.4%. Distribution deliveries fell 1.9% for the year and 4% for the fourth quarter on lower demand from industrial customers.
FirstEnergy’s performance is nearly identical with that of American Electric Power Corporation (NYSE:AEP). AEP reported 2008 EPS of $3.43, and guided 2009 EPS to $3.00-$3.40. FirstEnergy did not provide guidance, but falling demand for electricity, especially from industrial customers does not inspire confidence.
Analysts had early 2009 EPS estimates for FirstEnergy at $4.73. Barring a significant turnaround in demand, that does not seem likely. Shares in FirstEnergy are up about 1.25% in early trading.
Paul Ausick
February 24, 2009
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