(By Balaseshan) American Electric Power Co. Inc.(NYSE:AEP), a utility holding company, reported a 2.8 percent increase in quarterly earnings on cost cut measures and warmer than normal weather.
Profit increased 2.8 percent to $362 million for the second quarter, while earnings per share (EPS) rose 2.7 percent to $0.75. Operating earnings for the latest quarter were $370 million or $0.77 per share.
The company said the operating results was higher than GAAP earnings because of a pretax $13 million severance provision recorded in the latest quarter related to the first phase of AEP's cost restructuring program launched earlier this year.
Revenue remained flat with last year at $3.6 billion.
Analysts, on average, had expected EPS of $0.71 on revenue of $3.57 billion for the second quarter.
Retail margins for the second quarter were $15 million lower than last year, primarily due to lost margins from customer switching in Ohio.
Transmission Revenue for second-quarter 2012 was $22 million higher than previous year, primarily as a result of increased revenues in Electric Reliability Council of Texas (ERCOT) and PJM, including revenues associated with customer switching.
Total retail energy delivered marginally rose 0.2 percent to 42.44 billion kilowatt hour (kWh), while total wholesale energy delivered fell 15.6 percent to 8.62 billion kWh.
Chief Executive Nicholas Akins said the economy in the company's service territories has shown some signs of improvement, with growth in its western states outpacing that in its eastern states.
The company's earnings guidance for the full year 2012 remained suspended due to the ongoing Ohio regulatory proceedings. The company said it has received an order from the Public Utilities Commission of Ohio regarding capacity charges, but a decision on the Electric Security Plan, or ESP, is not expected until early August.
The company said its earnings performance was strong for the first half of the year, but it is likely to face challenges for the remainder of the year, including customer switching in Ohio. AEP said the costs and lost revenue associated with the late-June storm would be reflected primarily in third-quarter results.
AEP closed Thursday's regular session up 0.21 percent at $42. The stock has been trading between $33.09 and $42 for the past 52 weeks.