AES 2nd-Quarter Net Down 20% on Latin America Revenue Slump
08/06/2012| 07:02am US/Eastern
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By Saabira Chaudhuri
AES Corp.'s (>> The AES Corporation) second-quarter profit fell 20% as the power and utilities company saw a double-digit decline in revenue from its key Latin American utilities business.
Results missed expectations, and AES said it expects per-share earnings for the year to come in at the low end of its May guidance of $1.22 to $1.30.
AES, which operates utilities and wholesale power generators in the U.S. and Latin America, has been working to pay down its debt, in part by selling assets to focus on markets where it has a competitive advantage. It said in February it would sell roughly $2 billion of assets in markets like China as it plans to expand in core markets of Brazil, Chile and the U.S.
AES bought utility Dayton Power & Light owner DPL Inc. last year for $3.5 billion and in February said it would sell two units that own and operate a natural gas-fired power plant in Pennsylvania for $304 million in cash and assumption of debt to PPL Corp. (>> PPL Corporation).
Monday, Chief Executive Andres R. Gluski said AES is exceeding its $50 million cost-cutting target in 2012, with expected savings of $65 million this year. He said the company has announced or closed nine asset sales since September, representing more than $930 million in proceeds.
AES posted a profit of $140 million, or 18 cents a share, compared with a year-ago profit of $174 million, or 22 cents a share. Earnings from continuing operations dropped to nine cents a share from 24 cents. Revenue fell 5.5% to $4.19 billion.
Analysts polled by Thomson Reuters most recently expected per-share earnings of 27 cents on $4.69 billion in revenue.
Gross margin narrowed to 16.5% from 22.4% as the cost of sales edged up 1.7%.
Revenue from the Latin American utilities business, the biggest top-line contributor, fell 26%. Latin America generation revenue was down 5.4%.
Shares of AES closed Friday at $12.25 and were inactive premarket. The stock is up 13% in the past 12 months.
Write to Saabira Chaudhuri at saabira.chaudhuri@dowjones.com
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