Cooler temperatures cut into CUC profits

| 15/02/2011

(CNS): Local power provider Caribbean Utilities Company has released its unaudited results for the fourth quarter and full year for 2010 and revealed that profits were down for the year and in particular the last quarter as cooler weather lead to a fall in consumption. The firm said net earnings for the three months ended December 31, 2010 were $4.7 million, representing a decrease of 20% or $1.2 million from net earnings of $5.9 million for the three months ended December 31, 2009. The results do not relate to the recent problems faced at CUC following the explosion last month of one generator and the major failure of another.

The firm attributed lower sales during the period compared to the fourth quarter of 2009 to a cold December.Net earnings for the whole year were $19.9 million a 1% or $0.1 million fall from the $20.0 million the company earned in 2009. This was again due to lower sales the firm said as well as increased depreciation expense and an increase in finance charges.

Richard Hew, President and Chief Executive Officer of the Company said the results were no surprise. “Apart from the unusually cool weather in December, which caused significantly lower than expected sales, year-end results were as expected,” he said in the statement. “The Company continued its response to the recessionary economic environment by trimming capital and operating expenditures to maintain financial stability while meeting the obligation of safe and reliable service to our customers.”

Hew said that during 2010 higher fuel prices drove operating revenues up by $21.3 million, to $180.1 million."The higher fuel factor revenues in 2010 as a result of the fuel price increases were partially offset by a 10%, or $1.7 million, decrease in electricity sales revenue in fourth quarter 2010 which was driven by cooler weather,” he explained.

“Average fuel costs, which are passed on to customers without mark-up, rose from $2.77 per Imperial Gallon (“IG”) in 2009 to $3.45 per IG in 2010 with the fourth quarter 2010 average rising to $3.85 per IG.”

The CEO added that the company continued to invest in infrastructure and equipment during 2010 although at a lower level than in 2009 when capital expenditures of over $19.0 million were made on generation expansion. “Capital expenditures for 2010 were focused on transmission and distribution upgrades and generation plant replacements and upgrades. For the fourth quarter of 2010, capital expenditures were $5.5 million, down $1.0 million or 15% from $6.5 million for the fourth quarter of 2009.”

He also stated that the reliability of the power company’s service improved. “Reliability, measured by the Average System Availability Index, was 99.966% and exceeded 2009 results. Despite economic challenges on the island, we see safe and reliable electricity supply as critical in supporting the established financial services and tourism industries as well as in attracting new development.”

After adjustment for dividends on Class B Preference Shares, earnings on Class A Ordinary Shares for the fourth quarter of 2010 were $4.0 million, or $0.15 per Class A Ordinary Share, compared to $5.5 million, or $0.20 per Class A Ordinary Share for the fourth quarter of 2009. After adjustment for dividends on Class B Preference Shares, earnings on Class A Ordinary Shares for 2010 were $18.9 million, or $0.67 per Class A Ordinary Share, as compared to $18.8 million or $0.67 per Class A Ordinary Share in 2009.

See the full CUC Annual report (Investor Relations/Press Releases)

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  1. voiceofreason says:

    They’re so broke they can’t afford to pay someone to call you when they are about to cut off your power. I’m sure it has nothing to do with the fact they charge a re-connection fee! 

  2. Financial Dummy says:

    I don’t know much about high finance or the stock market…. If I did, I’d be rich like some of the stockholders of CUC.   Does this mean CUC made only 4.7 million dollars profit AFTER paying dividends to shareholders and making other "adjustments"?  It must be hard getting along on only twenty million dollars per year!

  3. Just Charmin says:

     Boo Hoo!!! Give me a break. My bills sure have not gone down. 

  4. Anonymous says:

    Nonsense – my bill for December was higher than usual – even though I had my a/c on for only 9 days in December.  They just make these figures up to give them leverage to raise prices even more.

    • MonkeySee says:

      Gotta say I feel the same way! We only use our AC @ night and this month our bill is higher than last month! makes NO SENSE! Boo to CUC Monopoly!!!

  5. Anonymous says:

    How can these cooler temperatures mean less money for CUC when my bill is still $120 more than previous years at the same time?
    Cry me a river!!

    • Anonymous says:

      Simple. Your bill is higher because the cost of fuel is much higher than it was a year ago. The larger portion of your bill reflects fuel costs. The cost of fuel is a ‘pass through’ and CUC makes no money on it.