CEO: DTE 2Q, 2001 Earnings on Track
DTE Energy Co. clarified its 2001 earnings predictions on Friday to include restructuring impacts and goodwill amortization related to its recently completed merger with MCN Energy Group, saying it expected "significant variations in quarterly earnings" because of the suspension of fuel and purchased-power cost recovery as part of Michigan's restructuring legislation in 2000, but expected earnings to remain on track.
The Detroit-based diversified energy company said that second quarter 2000 showed higher revenue because of a one-time fuel and purchased-power adjustments, but those revenue additions will not appear in the second quarter earnings for this year. Also, second quarter 2001 "will reflect the seasonality of the newly acquired MCN Energy gas business and one month of merger-related impacts" including a debt interest expense and additional shares outstanding, which were not present in 2000.
DTE CEO Anthony F. Earley Jr. said the company still expects to meet its projections of $3.50 to $3.60 a share by year's end before merger restructuring costs, with the second quarter earnings of $0.30 to $0.40. However, the one-time restructuring charge and seven months of goodwill amortization will reduce reported earnings to $2.25 to $2.35 per share.
However, DTE also reported it had a higher-than-expected acceptance of voluntary early retirement offers and a one-time after-tax restructuring charge related to its MCN merger, which will result in an additional after-tax savings of between $10 million and $15 million this year.
"As we embark on implementing the synergies derived from our merger, we recognize that this is an extraordinary opportunity to move forward with the transformation of DTE Energy into a premier regional energy powerhouse," said Earley. "Not only is our permanent cost structure lower as a result of the voluntary departures, but we see significant developmental opportunities for our remaining employees as we create new, more efficient internal work processes" with more employees taking early retirement.
About 1,400 employees with overlapping functions were offered early retirement packages, designed to reduce the work force, which stands at 11,300. Earley said DTE would leverage the high retirement rate to capture additional synergies by "improving work processes that will reduce the need to hire replacement employees."
The third and fourth quarter earnings are expected to benefit from continued, "significant, non-regulated growth," DTE said in a press release. Earley said that weather and market conditions could impact summer results, but said he is confident that the year-end earnings projections were both "realistic and achievable."
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