TXU second quarter profits drop 76%, or $376 million

by PegNews wire

DALLAS — TXU Corp., which earlier agreed to one of the largest buyouts ever, said second-quarter earnings fell because of reduced demand from cooler weather, increased coal fuel costs and lower pricing.

Photo not provided by TXU

After a 76% drop in profits, TXU execs may have to re-think some of their economic strategies

Net income was $121 million, or 26 cents per share, compared with a year-earlier profit of $497 million, or $1.07 per share. Revenue fell 24.2 percent to $2.02 billion, far below analysts' forecast of $2.51 billion. Due largely to cooler weather, retail sales of electricity in North Texas fell 30.6 percent.

Excluding special items, TXU earned $430 million, or 93 cents per share, down from $650 million, or $1.40 per share, for the second quarter of 2006.

Analysts surveyed by Thomson Financial had forecast $1.17 per share.

The results included hundreds of millions in special item expenses, primarily losses from the company's long-term hedging program and suspension of construction of eight of 11 planned coal-fired power plants as part of the buyout agreement. TXU took a charge against earnings of $54 million related to stopping work on eight coal plants. That was part of $320 million in one-time after-tax expenses that reduced profit by 69 cents per share, the company said.

TXU also said it had a gain of $51 million, from a deferred Texas tax benefit.

Sources: TXU, Forbes, Rueters