Enbridge Profit Tempered by Loss on Asset Sale
www.morningstar.ca 29 Jan 03(6:03 PM) | E-mail Article to a Friend By Jeffrey Jones
CALGARY, Alberta (Reuters) - Pipeline and utility company Enbridge Inc. <ENB.TO> said on Wednesday fourth-quarter profit slipped due to a loss on the sale of U.S. assets to an affiliate, although operating income matched expectations.
Enbridge, best known as operator of the main pipeline for Canadian oil exports to the United States, also raised its quarterly dividend 9 percent to C$0.415 a share, becoming the second Canadian energy firm to boost its payout in as many days.
It earned C$34 million ($22 million), or 18 Canadian cents a share, in the quarter, down from year-earlier C$40 million, or 25 Canadian cents a share.
Adjusting for a C$5.9 million loss on the sale of the Enbridge Midcoast assets to 12.9-percent owned Enbridge Energy Partners <EEP.N>, the company's earnings were C$40 million, or 25 Canadian cents a share, just a penny under an average estimate among analysts polled by Thomson First Call.
The result was driven by strong performances from Alberta pipelines, the U.S. partnership and a higher return from its major Ontario gas utility, Enbridge Consumers, Enbridge said.
Enbridge sold the southern U.S. pipeline and processing assets to its partnership to cut debt, but was forced to cut the price in September by $109 million to $820 million amid poor energy industry conditions in the United States.
Revenues were C$658 million, down from C$712 million.
For the full year, Enbridge earned C$577 million, or C$3.60 a share, up from C$459 million, or C$2.91 a share, in 2001.
"The significant dividend increase announced today reflects confidence in our ability to continue to deliver above-average earnings growth," chief executive Pat Daniel said.
The dividend boost, the company's eighth consecutive increase, follows an 8-percent increase in rival TransCanada PipeLines Ltd.'s <TRP.TO> dividend and highlights the confidence among Canadian energy transport firms compared with U.S. firms, which are struggling with credit concerns.
Enbridge executives predicted first-quarter earnings of 55-60 Canadian cents a share, down from last year's 71 Canadian cents, a drop blamed on an Ontario Energy Board decision to reject an allowance Enbridge sought related to its stake in the Alliance natural gas pipeline.
But Enbridge said it was sticking to its previous outlook of C$2.85-C$2.95 a share for 2003.
The stock slipped 4 Canadian cents to C$43.36 on Wednesday, down 5.5 percent since the start of the last quarter and lagging a 5 percent rise in the Toronto Stock Exchange's main index.
Despite its expansion into natural gas and international businesses, Daniel said oil transport remained the cornerstone of the company, stressing it accounted for half of earnings.
That business has become more important as the United States has sought secure sources of supply amid tensions in the Middle East and the protracted strike in Venezuela, which provided 13 percent of U.S. oil needs, he said.
"It really highlights the reliability and long-term role of Canadian supply. That positioning has never been better," he said.
Canadian output is increasing with development of Alberta's vast oil sands, a situation aided by new guarantees from Ottawa that the recently ratified Kyoto accord on climate change won't cause insurmountable costs, Daniel said.
With expansion, Enbridge's mainline, which runs to the U.S. Midwest and southern Ontario from western Canada, is expected to pump 1.56 million barrels a day by the end of this year, a jump of 170,000 from the end of 2002.
Meanwhile, Enbridge said chief financial officer Derek Truswell was set to retire on April 1. He will be replaced by Stephen Wuori, now vice president of planning and development.
($1=$1.52 Canadian)