By Edward Klump
Oct. 27 (Bloomberg) -- FPL Group Inc., the largest U.S. producer of wind power, said third-quarter profit, excluding a gain related to contracts used to lock in commodity prices, missed analysts' estimates.
Excluding such items as a $285 million gain related to hedging, FPL earned $1.25 a share, 10 cents below the average of 12 analyst estimates compiled by Bloomberg. The company cut planned 2009 spending to $5.3 billion from $7 billion. FPL said it will build about 1,100 megawatts at its competitive-power unit next year, down from a possible 1,500 megawatts.
Net income climbed to $774 million, or $1.92 a share, from $533 million, or $1.33, a year earlier, Juno Beach, Florida- based FPL said today in a statement. Revenue rose 18 percent to $5.39 billion.
``The quarter looks a little lighter than expected,'' said Barry Abramson, who helps manage $25.6 billion in assets, including about 1 million FPL shares, at Gamco Investors Inc. in Rye, New York. He said it's a ``surprise'' to see a reduction in new wind capacity.
FPL fell $1.89, or 4.4 percent, to $41.31 at 9:55 a.m. in New York Stock Exchange composite trading.
FPL owns Florida's largest electric utility and has expanded by purchasing nuclear reactors and building wind farms outside of its home state. The company completed its $924 million purchase of the Point Beach nuclear plant in Wisconsin last year. FPL also plans new solar capacity in Florida and California as it continues to build more wind capacity.
Profit from competitive electricity sales, excluding one- time items, rose 19 percent to $215 million in the quarter from a year earlier.
Florida Economy
FPL's Florida Power & Light utility, which provides electricity to about 4.5 million homes and businesses, has been dealing with economic weakness in the state. The unit's net income fell 3.7 percent to $314 million as retail sales of power dropped 4.3 percent.
FPL Chief Executive Officer Lewis Hay III said in the statement that ``we will be temporarily deferring a modest amount of our growth capital expenditures at both businesses, and we have plans in place for more deferrals if conditions deteriorate.'' The company remains ``optimistic about our long- term growth prospects,'' Hay said.
The company said on a conference call today that its utility customer count is at its lowest since July 2007, and it's seeing more inactive, low-usage customers in Florida.
2008 Outlook
FPL's nuclear reactors provide a cost advantage over some other fuel types. U.S. nuclear plants produced electricity in the third quarter for as little as $18 per megawatt-hour, 70 percent less than the cost for the most efficient plants fueled by natural gas, according to Jeremy Sussman, an analyst at Natixis Bleichroeder in New York.
FPL said its 2008 adjusted earnings should be at the lower end of its per-share forecast of $3.83 to $3.93. Abramson said FPL's outlook in Florida should be good in the long run.
``There is a slowdown, but I would say it's just temporary,'' Abramson said. ``It's too early to say that there's been a permanent change in the behavior of Americans because, you know, we've had like this 50-year trend of people moving to warmer places, especially when they retire.''
To contact the reporter on this story: Edward Klump in Houston at eklump@bloomberg.net.
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