TransCanada Corp. shares moved slightly higher on Tuesday on news that the company beat analysts' earnings estimates for the quarter and the year. Net income from continuing operations was up 22% for the year to $2.02/share compared to analysts' estimates of $1.53/share. For the quarter net income from continuing operations fell 5% to 38 cents/share but still beat estimates by about 6 cents/share.
Net income was up 21% for the year but down 4% for the quarter. Gas transmission operations posted poorer results -- down 2% for the quarter and 6% for the year. Power operations posted an 80% increase in income for the year but a 30% drop in income for the quarter. TransCanada's board raised the company's quarterly dividend 5.2% to $0.305.
"It has been a year of steady performance for TransCanada," said CEO Hal Kvisle. "We delivered solid operating and financial results, and invested approximately $2.6 billion, including the assumption of debt, in our core businesses of gas transmission and power generation.
"TransCanada's strong overall performance in 2004 was achieved despite the negative impacts of disappointing decisions from the Alberta Energy and Utilities Board related to the Alberta System and an unfavorable arbitration decision on Ocean State Power gas supply costs," he said. "In 2005, we will remain focussed on addressing these issues. We will also continue to implement our core strategies to grow our North American operations... Our announcements during the fourth quarter are excellent examples of the initiatives we are undertaking to strengthen our financial performance and create long-term value."
The company had an active fourth quarter. It closed its $1.7 billion purchase of Gas Transmission Northwest (GTN), which Kvisle said was simply the best pipeline asset available and one that will significantly compliment the company's other gas transmission operations. GTN includes the former Pacific Gas Transmission system, a 1,350-mile pipeline extending from a point near Kingsgate, BC, on the BC-Idaho border, to a point near Malin, OR, on the Oregon-California border. GTN also operates the recently built 80-mile North Baja Pipeline system, which links the Southwest gas grid from a point near Ehrenberg, AZ, to markets in Baja California Norte, Mexico. Kvisle also noted that GTN's system in the Pacific Northwest will be a major downstream transporter of gas from Alaska and the Mackenzie delta when it arrives. The system already transports about 30% of Canada's natural gas production.
During the fourth quarter, TransCanada also announced plans to buy 567 MW of hydropower from USGen New England for US$505 million, completed the 90 MW Grandview cogeneration plant in New Brunswick, moved forward with Cartier Wind Energy Inc.'s six projects (739.5 MW) in Quebec, announced plans with Shell for the proposed Broadwater LNG terminal in Long Island Sound, and launched a major gas storage initiative in Alberta with plans for a new 50 Bcf storage field in Edson, AB, and the leasing of 40 Bcf of storage space at an existing field.
TransCanada's net earnings for the year ended were $980 million compared to $801 million for 2003. The increase was primarily a result of significantly higher net earnings from its power business. In addition, lower net expenses in the corporate segment offset the lower net earnings from the gas transmission business. The increased power earnings were primarily due to the second quarter 2004 gain on the sale of the ManChief and Curtis Palmer assets to TransCanada Power LP and the recognition of dilution and other gains resulting from a reduction in TransCanada's ownership interest in Power LP.
The lower net earnings of $36 million in the gas transmission business for the year were primarily due to lower earnings from the Alberta System and Canadian Mainline, partially offset by earnings from GTN, higher earnings from certain other gas transmission investments and a $7 million gain on sale of the company's equity interest in the Millennium Pipeline project in second quarter 2004.
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