Net income dropped to 35 million pounds ($70 million), or 2.3 pence a share, from 117 million pounds, or 7.5 pence, a year earlier, London-based International Power said today in a statement distributed by the Regulatory News Service.
Earnings in Australia were hampered by a bush fire that curbed production and the company fixed sales contracts before Australian electricity prices jumped, International Power said. A milder-than-usual winter in the U.S. and Europe also limited sales.
``It was below consensus, but I think they're still on track for the full year,'' Lakis Athanasiou, an analyst at Collins Stewart Ltd. in London, said by phone today. ``In Australia, the company stands to benefit from the rise in prices in 2008.'' He rates the stock a ``buy.''
Shares of the company rose 1 pence, or 0.2 percent, to 446.3 pence as of 11:28 a.m. in London. They have gained 16.9 percent this year, valuing the company at 6.7 billion pounds ($13.3 billion). The 33-member Dow Jones Stoxx Utilities Index has added 5.7 percent.
`Strongly Contracted'
``We are pretty strongly contracted in Australia,'' Chief Executive Officer Philip Cox said on a conference call. ``It takes time'' for the company to benefit from the higher prices, he said.
Forward energy prices are ``very much a call on the forward price of oil,'' Cox said in an interview today. ``We would expect gas prices to be not very different from where they are today. It was very high last year and came down a lot suddenly.''
Earnings in the U.K. were reduced by a write-down of the company's natural-gas supply contract for its Saltend power station. The write-down was speeded up because of a fall in forward gas prices, International Power said.
``Whilst initial reaction to these results may be mildly negative (especially after the recent strong performance of the shares) when the accounting issue for Saltend is digested this should bring some relief,'' analysts at Dresdner Kleinwort in London, including Ajay Patel, said today in a note. Patel rates the stock a 'hold.'
Average natural-gas prices for delivery in the U.K., a European price benchmark, were 22.3 pence a therm in the first three months of this year, less than half compared with the same period last year when average gas prices were 66.2 pence a therm, according to energy broker ICAP.
