International Power Falls on Impact of Plant Shutdown

By Paul Dobson

Aug. 7 (Bloomberg) -- International Power Plc, the U.K. utility that generates electricity in 20 countries, fell the most in a year in London trading after saying second-half results will be ``adversely impacted'' by an extended power-station shutdown.

International Power slid as much as 30 pence, or 7.1 percent, to 391 pence, the steepest one-day decline since Aug. 10 last year. The stock traded at 400 pence as of 10:43 a.m. local time, valuing the London-based company at 6.04 billion pounds ($11.8 billion).

The utility owns regulated and market-based projects in Europe, the U.S., Asia and Australia, to spread the risk of its portfolio. A prolonged halt at its Rugeley plant in the U.K. will cost International Power 45 million pounds, it said today in a statement. First-half earnings also missed analysts' estimates.

``The market may be disappointed by the issues at Rugeley,'' Edmund Reid, an analyst at JPMorgan Cazenove Ltd., wrote in a note to investors today.

One of two power-generation units at the coal-fired Rugeley plant in central England will be offline for another nine weeks because of a component failure, Chief Executive Officer Philip Cox said in a Bloomberg Television interview. The plant's two 500-megawatt units won't be ready to comply with rules on emissions of some poisonous gases until the end of this year or early 2009, further limiting operating hours.

Miss Estimates

International Power earlier today reported first-half earnings per share excluding one-time items of 14.2 pence, below the 14.8-pence median estimate of five analysts surveyed by Bloomberg News. Earnings were curbed by an unplanned production halt at three units of its Hazelwood plant in Australia.

``These one-offs are very frustrating,'' Cox said in the interview. ``The underlying business is strongly profitable'' and there's ``plenty of optimism that we can keep growing.''

Cox is adding generation facilities from Pakistan to Portugal. The utility reached a 30-year agreement this week with Indonesia's PT Perusahaan Listrik Negara on power sales from a coal-fired plant it's building in the Southeast Asian country.

``We've announced just over 3,100 megawatts of new capacity since the start of the year,'' Cox said on a call with reporters today. ``All our markets provide growth opportunities.''

The company will target acquisitions and plans to build more plants in the Middle East and Southeast Asia, where demand for power generation is ``strong,'' according to Cox. He also expects ``improved returns from our merchant markets,'' including the U.K., where profits for plants are widening.

Higher Costs

Engineering and construction costs are driving up expenses for new electricity stations, and International Power may cut the size of a future plant in Botswana after the preferred contractor for the project declined to take on undisclosed risks.

``We have to factor in higher costs and longer delivery dates,'' as well as persuading customers of the increased prices, Cox said. It isn't a competitive disadvantage, because it affects all power producers, he added.

International Power raised its interim dividend 29 percent to 3.56 pence a share.

The company posted a first-half net loss of 2 million pounds, including a deduction of 217 million pounds attributable to one- time items and traded-market positions, compared with a profit of 196 million pounds a year earlier.

To contact the reporter on this story: Paul Dobson in London at pdobson2@bloomberg.net