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Press Release –
Calgary, AB – July 28, 2014 – ATCO Ltd. (TSX:ACO.X) (TSX:ACO.Y)
ATCO today reported second quarter adjusted earnings of $57 million in 2014 compared to $89 million in 2013. Adjusted earnings were $172 million for the six months ended June 30, 2014 compared to $209 million for the same period of 2013. Major drivers of this decrease were unfavourable market conditions in the Company’s power generation business, an Alberta Utilities Commission (AUC) decision received by the Utilities in the second quarter and reduced earnings from ATCO Structures & Logistics.
The decrease in earnings in ATCO Power was primarily due to a 66% decline in the average Alberta Power Pool price in the second quarter of 2014 over the same period in 2013 and higher natural gas input costs. Also contributing to the decrease were higher business development costs to pursue power generation opportunities and the launch of ATCO Power’s recently announced commercial and industrial sales program.
The decrease in earnings was also impacted by the AUC decision for information technology (IT) in the second quarter of 2014. The decision covers an unusually long period from the start of 2010 to the end of 2014. It reduced the Company’s adjusted earnings in the second quarter by $14 million, of which only $1 million related to the second quarter of 2014, and $13 million related to prior periods. The Utilities continued to invest in electricity and natural gas transmission and distribution facilities to support growth in the province and replace aging infrastructure. ATCO Electric, ATCO Gas and ATCO Pipelines collectively invested $501 million in the second quarter, bringing the total for the first half of 2014 to $1 billion.
ATCO Structures & Logistics’ second quarter earnings were lower than the same period last year. The earnings for this company are significantly influenced by the cyclical nature of large natural resource project activity. Reduced manufacturing activity and profit margins, combined with lower utilization and reduced rental rates and expiry of a logistics and facility services contract, resulted in lower earnings.
Earnings attributable to Class I and Class II Shares were $66 million for the quarter ended June 30, 2014 compared to $98 million in the same period of 2013. Earnings attributable to Class I and Class II Shares were $193 million for the six months ended June 30, 2014 compared to $215 million in the same period of 2013.
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