Richmond, VA-based Dominion Resources Inc. has affirmed its 2008 earnings guidance of $3.10 to $3.15 per share while dropping both its 2009 guidance and spending plans. The company said it has "more than adequate liquidity," but given the current macroeconomic situation will be cutting $350 million from capital expenditures and reducing some nonfuel operating and maintenance expenses.
"We are confident in the underlying strength of our business model. However, since our third quarter earnings call on Oct. 30, increasing costs of capital, projected increases in pension and other benefit costs as well as a continued decline in commodity prices have led us to revisit our previous assumptions," said Thomas F. Farrell II, Dominion chairman and CEO, said in an earnings guidance press release.
Dominion revised the operating earnings outlook for 2009 to $3.20-3.30/share from $3.30-3.45/share. It declared an 11% dividend increase and reconfirmed its dividend policy.
The company now expects an operating earnings per share growth rate of 3-6% in 2009 over 2008 earnings; a 4-6% growth rate in 2010 over 2009 earnings; and a return to a 6% or more growth rate in 2011 when it expects a return to normal economic conditions.
"Dominion has more than adequate liquidity, and we have been able to successfully access the capital markets in recent months. Yet, given the increased interest rates and widespread economic pressures in the marketplace, we find it prudent to conserve cash and lower our financing requirements. For this reason, we plan to selectively reduce 2009 nonfuel operating and maintenance expenses as well as reduce planned capital expenditures by approximately $350 million," Farrell said.
"Unlike many other areas of the country that are facing negative energy demand, our Virginia service territory is still enjoying growth, albeit at a slower rate. Additionally, we have pre-approved spending on major infrastructure projects in a favorable regulatory environment. And even with the projected increases in pension and other benefit costs, no contributions to our pension plans are needed any earlier than mid-2010."
The company will discuss its 2009 guidance, 2010 outlook and growth rates in more detail on its Jan. 29 fourth quarter earnings conference call. The company operates through subsidiaries Dominion Virginia Power, Dominion Generation and Dominion Energy. The Dominion Energy segment provides regulated gas transmission pipeline and storage operations, and includes the company's Appalachian natural gas exploration and production business. It also offers producer services, aggregating, transporting, trading and storing natural gas supply, and delivers to residential, commercial, and industrial gas sales and transportation customers in Ohio.
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