After last year’s phenomenal earnings growth rate of 26%,UtiliCorp United’s CEO thinks the energy services provider hasnever been stronger, and said last week that the company’s diverseportfolio should guarantee earnings of at least 15% for the nextseveral years. Rick C. Green Jr. stressed, though, that diversitydid not necessarily mean adding more assets, just doing well withthe ones the company already holds.
CEO Green, speaking to analysts at a meeting in Kansas City, MO,said the market was “finally starting to recognize” UtiliCorp’sstrength, a recognition that he said was not recognized byinvestors more than a year ago.
“Not quite a year ago, our stock traded at an all time low,”Green said. “By the end of the year, it was trading at $31 a share,and it continues to trade at $31 a share.” Pointing to thecompany’s recent completion of a successful equity offering, Greensaid there continues to be a “strong demand on the institutionalside” for UtiliCorp’s diverse products and limited strategies. InFebruary, UtiliCorp announced that it saw a 56% increase in salesin 2000 along with its strong earnings rise. The company setrecords for earnings before interest and taxes, net income andsales in 2000.
Green noted that the company’s success rested not in itsportfolio, per se, but rather in its “limited number ofstrategies,” which he said it had “gotten very good” at fulfilling.”As you invest in your businesses, you find there is a lot ofopportunity in the daily course of business to monetize yourassets. We’ve had an ongoing stream of profit over the years.”
Three key strategies are pushing UtiliCorp’s future: to become apremier global energy merchant; to develop risk energy products;and to become a leading service provider. With that small strategybase, Green said that the company’s risk energy market has grown”phenomenally,” and now considers itself a world class manager ofenergy assets.
“One of the keys to grow profit has been our attitude towardrunning the business,” he said. “For three years we had 8% growthand in 2000 we had 26% growth, with more customers and more marketshare. That has given us the confidence that our bar going forwardis 15% and we are confident that we can do that into the future.”
Stressing that its broadband strategy had been in place “forseveral years,” Green said that UtiliCorp wants to become moreunregulated as it moves forward, and energy services will be key tothis. “We want to become an unregulated company…by plan and bychoice,” he said. “We’ve spent a lot more time growing our merchantand international businesses. Broadband has the potential to growand would continue to cause the regulated part of the business tobecome a smaller portion of the business.”
Last year, on March 31, 2000, the company had total assets of$7.5 billion and annual sales of $19.6 billion. It now serves about4 million customers across the United States and in Canada, theUnited Kingdom, New Zealand and Australia. For 1999 it was rankedthe second-largest wholesale marketer of electricity in the UnitedStates and the third-largest marketer of natural gas.
Carolyn Davis, Houston
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