Allegheny Energy sees net at upper end of range
By Jim Brumm
NEW YORK, July 27 (Reuters) - Allegheny Energy Inc. now sees 2001 earnings per share at "the upper end" of its $3.80 to $4.10 target range, Chief Financial Officer Bruce Walenczyk said Friday.
Analysts reporting to Thomson Financial/First Call now expect the utility holding company to earn $3.65 to $4.00 per share this year with the consensus put at $3.85. The company earned $2.84 a share in 2000.
Speaking on a conference call discussing the Hagerstown, Maryland-based company's 70 percent jump in second-quarter earnings, Walenczyk pointed out the target, which was set early this year, included 10 cents a share for what was then expected to be a mid-year end to amortization of good will.
Although the company now expects the amortization of the good will associated with its March purchase of Merrill Lynch and Co. Inc's energy trading operation to continue all year, Walenczyk said Allegheny is not reducing its target to reflect this change.
Instead, earnings are expected at the upper end of the range, he stressed in response to analysts' questions.
But he declined to say how the company expects second have profits to be distributed between the third and fourth quarters.
NO QUARTERLY GUIDANCE
"We're not going to give quarterly guidance" for the rest of the year, Walenczyk said while agreeing "a little bit" of what the company had expected in the third quarter did add to the second quarter earnings growth.
Analysts now expect the company Allegheny to earn $1.30 to $1.43 in the third quarter and 85 cents to 92 cents in the fourth quarter, with the consensus at $.135 and 88 cents, respectively.
Late Thursday Allegheny reported second quarter earnings per share of $1.01 well above the analysts' range of 70 to 80 cents.
During the quarter, the CFO said, the company's total retail power sales were unchanged from 2000 despite cooler weather.
This reflected growth in the number of customers being served, he said. Residential power sales were unchanged while increased commercial sales offset lower industrial power sales in the latest quarter.
Walenczyk reiterated Allegheny's long-term growth target of over 10 percent per year but declined to provide any guidance for next year until after the company's budgeting process is completed late in the third quarter.
The 15 analysts reporting 2002 projections range from $4.00 to $4.48 with a consensus of $4.26.
Allegheny stock was trading five cents lower at $43.80 in afternoon trade on the New York Stock Exchange.
15:09 07-27-01
Alcoa's new smelter technology could reshape industry
(UPDATE: Recasts, adds details, stock prices, byline. pvs. PITTSBURGH.)
By Jim Brumm
NEW YORK, June 22 (Reuters) - Alcoa Inc. (NYSE:AA), the world's largest aluminum producer, said on Thursday it is testing smelting technologies that could reduce the price of the light metal as much as one-third while making its production environmentally friendly.
Analysts said the technologies, which would require much less electricity to produce aluminum, could have a far-reaching impact on many industries. Much cheaper aluminum could reduce demand for steel and glass, with which it competes to make auto parts and beverage cans.
The smelting changes would also slow the growth in demand for electricity, according to a report by Credit Suisse First Boston analyst Thomas Van Leeuwen. Aluminum smelters using current technology are voracious electricity users.
``Aluminum intensive automobiles, aided by better fuel cell technology, would be closer to widespread adoption. Aluminum could also strengthen its position in beverage containers,'' he said.
Alcoa announced the development after Van Leeuwen published the report, abandoning its policy of not commenting on technology until trials are completed.
The company said it is testing inert anode and wettable cathode smelting techniques, adding it had been granted U.S. patents on these advanced smelting process technologies.
Assuming the technologies prove commercially feasible, the company statement said it believes it will be able to convert its existing potlines leading to ``significant'' operating cost and capital investment savings.
Alcoa said the inert anode technology is being evaluated in commercial cell trials at an undisclosed Alcoa plant, and the trials are producing encouraging results.
Testing is continuing and no timetable has been established for commercial use, the brief Alcoa statement concluded.
Spokeswoman Bonita Cersosimo said the company will be evaluating ongoing trials of the new cathodes by year end.
Van Leeuwen told Reuters the industry will ``start to see an impact (from these technologies) by the middle of this decade.''
Rival Alcan Aluminum Ltd. (NYSE:AL) believes this is optimistic, said its spokesman Marc Osborne.
Kaiser Aluminum Corp. (NYSE:KLU) spokesman Scott Lamb said this is ``no timetable for commercialization'' of the wettable cathodes technology Kaiser is working on with the U.S. Department of Energy.
Van Leeuwen estimated the two technologies together could reduce the cost of aluminum by 11 to 25 cents a pound. The cost of aluminum for North American customers is now about 75 cents a pound.
``We do not believe all of the cost reductions would be captured as increased profits,'' he wrote. ``Instead, we think the long-term price of aluminum would drop.''
Because the new cathodes would allow an increase of up to 40 percent in the capacity of smelters now in operation, Van Leeuwen said he expects this to defer the construction of new smelters for several years.
The inert anode technology, meanwhile, would reduce the cost of new smelters by about 25 percent, he said.
New plants cost between $4,000 and $4,500 per metric tonne of annual capacity, he noted in a telephone interview.
Alcan's new smelter, now being started up in Quebec, has a capacity of 375,000 tonnes per year.
``Further, with the deployment of inert anodes, aluminum smelting would generate oxygen, not greenhouse gases,'' Van Leeuwan's report points out.
Besides Alcoa, Alcan and Kaiser, companies producing aluminum in North America include Rio Tinto Plc's Comalco and privately owned Northwest Aluminum.
In trading Thursday, Alcoa and Alcan shares posted fractional gains, while Kaiser and Rio Tinto were fractionally lower.