By Paul Dobson
Nov. 6 (Bloomberg) -- International Power Plc, the U.K. utility that produces electricity in 20 countries, rose in London trading after saying earnings from British gas-fired and hydroelectric plants will offset shutdowns at other stations.
International Power rose as much as 11.75 pence, or 4.6 percent, to 268 pence and was 266 pence at 9:53 a.m. in London. The shares outperformed the Dow Jones Europe Stoxx Utilities Index, which declined 2.6 percent.
``International Power's diverse portfolio continues to serve it well,'' Tina Cook, an analyst at Charles Stanley in London, said today by e-mail. The company has ``capitalized on the currently tight conditions in the U.K. power market.''
The Deeside gas-fed plant and hydro plants in Wales captured higher U.K. power prices and ran harder after shutdowns at other generators made electricity production more profitable, the company said today in a statement. Month-ahead power in the U.K. traded at a record of more than 150 pounds ($238) a megawatt-hour last month, according to ICAP Plc.
``The fundamentals of our business remain strong,'' the London-based company said. The utility doesn't need to carry out any ``significant'' refinancing of debt until 2010, it added.
Unscheduled production halts have caused International Power to underperform its peers this year. In August, the company said work at its Rugeley station in England would dent full-year profit. It announced on Oct. 14 that a fire shut its ISAB plant in Italy for the rest of the year.
`Marginally Lower'
Profit margins for plants in North America will be ``marginally lower'' than the company's previous guidance, according to today's statement.
Chief Executive Officer Philip Cox is adding generation facilities from Portugal to Pakistan to profit from growing global demand. The company 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 its Hazelwood plant in Australia.
International Power started both power-generation units at its coal-fired Rugeley station by Oct. 9, after turbine upgrade work failed and forced the plant to be shut down. The company said today it will delay work to complete reductions in sulfur emissions from the plant to the first quarter next year, from a previous target for the end of this year.
End of Year
The company said one unit at the 562-megawatt ISAB plant will be offline for the whole of 2009, and the lost earnings will be covered by insurance. A second unit at the plant will start before the end of this year.
In Pakistan, some payments for the electricity International Power produces have been delayed. The company is receiving payments for current output and interest on overdue amounts. It's ``confident that the issue will be resolved satisfactorily.''
The company may become a bid target because the drop in its share price is unwarranted, Evolution Securities Ltd. analysts said on Oct. 16. Declines related to lower crude-oil prices and higher borrowing costs aren't justified, they said.
International Power has ``good liquidity, strong free cash flow generation, and committed corporate bank facilities of $850 million,'' it said today.
The ``solid'' financial position and confidence that the position in Pakistan will be resolved are ``reassuring,'' Cook said.
International Power forecast the tax rate this year will be about 22 percent.
To contact the reporter on this story: Paul Dobson in London at pdobson2@bloomberg.net
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