FirstEnergy posts $1.1 billion loss related to coal unit closings

FirstEnergy Corp. lost more than $1 billion in its second quarter related to upcoming coal power plant closings and said it also expects to finish the year with a loss.
The Akron utility reported a net loss of $1.1 billion, or $2.56 cents per share, on revenue of $3.4 billion. The company said the loss is largely “from asset impairment and plant exit costs in the company’s competitive business” related to the planned closing of coal-fired units at two Ohio power plants.
FirstEnergy last week announced it was going to take a more than $1.5 billion pre-tax charge in the second quarter as part of a decision to sell or close its Bay Shore coal plant near Toledo and shut down four coal units at its large W.H. Sammis plant along the Ohio River.
The company said it had a profit of 56 cents per share when adjusted for one-time factors.
A year ago, FirstEnergy posted a profit of $187 million, or 44 cents per share, on revenue of $3.5 billion.
Earnings per share beat analyst estimates. FirstEnergy reported results after the stock market closed Thursday.
“We continue to make steady progress on our strategic initiatives, while positioning FirstEnergy for stable, predictable, and customer-service oriented growth,” Charles E. Jones, FirstEnergy president and chief executive officer, said in a statement. “At the same time, we have made difficult but necessary decisions to address the continuing impact of challenging market conditions on our competitive business.”
FirstEnergy’s second quarter involved taking pre-tax asset impairment and plant exit costs of $1.5 billion associated with the upcoming deactivation of four coal-fired units at its Sammis power plant and the closure or sale of its Bay Shore Unit 1 plant. The closures will not take place until 2020. FirstEnergy said it is taking other one-time charges as well.
FirstEnergy expects to return to profitability in the third quarter and earn between 63 cents to 73 cents per share. Adjusted earnings will range between 65 cents to 75 cents per share.
For the full fiscal year, FirstEnergy said it expects to lose 75 cents to 55 cents per share, in large part because of its second quarter loss. Adjusted earnings are expected to show a profit of $2.40 to $2.60 per share.
For the first six months of fiscal 2016, FirstEnergy showed a loss of $761 million or $1.79 per share on revenues of $7.3 billion. Adjusted earnings showed a profit of $1.35 per share.
That compares to net income of $409 million, or 97 cents per share on revenue of $7.4 billion for the first six months of fiscal 2015. Adjusted earnings for the same period a year ago were $1.15 per share.