Better-than-expected news, combined with a stock market that
exploded upward, catapulted FirstEnergy Corp.'s stock up more than
16 percent Wednesday.
The Akron utility giant reported second-quarter financial results
that exceeded analysts' expectations. The company had net income of
$233 million, or 79 cents per share, on revenue of $2.9 billion. Net
income was up 60 percent, and revenue up 61 percent, compared with a
year ago, prior to the company's acquisition of New Jersey-based GPU
Shares in FirstEnergy closed up 16.4 percent to $29.16. Even with
the huge one-day rise, FirstEnergy shares are down 16.6 percent this
year to date, reflecting concerns over the utility's damaged
Davis-Besse nuclear plant, possible delays in the sale of four
coal-fired plants, and the overall downdraft in the stock
Company officials say they still expect Davis-Besse, which has
been shut down since mid-February, to be ready to be restarted by
the end of the year, providing the Nuclear Regulatory Commission
gives permission. Boric acid ate two cavities in the thick steel
reactor vessel head that covers the nuclear fuel.
Expenses associated withDavis-Besse, including the purchase of
$32 million in replacement electricity, cost FirstEnergy $52 million
in the second quarter, the company reported. That doesn't include
the costs for the replacement vessel head, estimated at between $55
million and $75 million.
The company has contracts in place to buy replacement electricity
through the end of the year to make up for the loss of Davis-Besse's
850 megawatt capacity, and can make similar hedges for the first few
months of 2003 if needed, officials said Wednesday.
Despite Davis-Besse problems, FirstEnergy officials said they
were able to reduce debt and increase electric sales margins, among
other things, to improve the company's finances.
``That was a very strong quarter,'' said analyst Paul Ridzon,
associate vice president with Cleveland-based McDonald Investments.
He said he expected FirstEnergy to earn 76 cents a share.
``I knew they would do everything they could to offset
Davis-Besse impacts,'' Ridzon said.
FirstEnergy executives said the company remains committed to
aggressively slashing billions of dollars of debt over the next
Senior Vice President and Chief Financial Officer Richard Marsh
also said the company expects to sell four coal power plants along
Lake Erie to NRG Energy Inc. for $1.5 billion. The financially
strapped Minnesota-based utility has delayed its purchase of the
plants for now.
``We continue to anticipate a timely closing to the
transaction,'' Marsh said.
FirstEnergy should earn between $3.30 and $3.45 a share for this
year, and anticipates earnings will grow 7 percent to 8 percent in
2003, he said.
FirstEnergy earned $349.8 million, or $1.19 per share, on revenue
of $5.8 billion for the first six months of the year, up from $243.7
million, or $1.11 per share, on revenue of $3.8 billion for the same
period a year ago.