FirstEnergy Reports Falling Demand (FE, AEP)

Infrastructure

Published: February 24, 2009 9:45 am

Last Updated: March 26, 2020 1:13 am

power-lines-image FirstEnergy Corporation (NYSE:FE) reported 2008 EPS of $4.38, higher than anticipated EPS of $4.33. Revenue for the year also beat expectations, coming in at $14.6 billion compared with average estimates of $14.51 billion. What may be more interesting than the earnings is the trends in usage.

The company saw an overall decrease in electricity sales of 2.5% from 2007 to 2008. In the fourth quarter, retail sales dropped 4.8% and wholesale sales dropped 3.4%. Distribution deliveries fell 1.9% for the year and 4% for the fourth quarter on lower demand from industrial customers.

FirstEnergy’s performance is nearly identical with that of American Electric Power Corporation (NYSE:AEP). AEP reported 2008 EPS of $3.43, and guided 2009 EPS to $3.00-$3.40. FirstEnergy did not provide guidance, but falling demand for electricity, especially from industrial customers does not inspire confidence.

Analysts had early 2009 EPS estimates for FirstEnergy at $4.73. Barring a significant turnaround in demand, that does not seem likely. Shares in FirstEnergy are up about 1.25% in early trading.

Paul Ausick
February 24, 2009

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