CenterPoint’s Profit Declines on Higher Taxes, Costs

CenterPoint Energy Inc. (CNP), Houston’s electricity distributor, said fourth-quarter profit fell 19 percent after income taxes rose and transmission costs increased. The company tumbled in New York trading after it said 2009 earnings will be below analyst estimates.

Net income dropped to $87 million, or 25 cents a share, from $108 million, or 32 cents, a year earlier, Houston-based CenterPoint said today in a statement. Revenue rose 6.6 percent to $2.77 billion.

Income-tax costs in the quarter climbed 59 percent to $65 million, CenterPoint said. Profit from electricity transmission and distribution fell 15 percent to $88 million, before interest and some taxes, on higher costs billed to the company from other power-line operators. CenterPoint’s earnings per share matched the average estimate of 25 cents from 7 analysts compiled by Bloomberg.

“I think the quarter was in line and what we were looking for broadly,” said Nathan Judge, an analyst at Atlantic Equities LLP in London who has an “overweight” rating on CenterPoint shares and doesn’t own any.

Judge said he was “disappointed” with the company’s forecast. CenterPoint said it expected 2009 profit of $1.05 to $1.15 a share. That’s below the average estimate, excluding one- time items, of $1.29 a share from eight analysts.

CenterPoint fell $1.36, or 11 percent, to $10.52 in New York Stock Exchange composite trading, its biggest percentage drop since Oct. 15.

Gas Distribution

Natural-gas distribution had earnings of $96 million, compared with $89 million a year earlier, as the company gained about 25,000 customers since December 2007. The company said it had earnings of $26 million on gas sales in competitive markets, compared with income of $19 million in 2007’s fourth quarter.

Earnings from gathering and processing gas rose 8.3 percent to $26 million. Income from the pipeline segment fell 7 percent to $66 million.

CenterPoint Chief Executive Officer David McClanahan also has worked to expand the company’s pipeline business. A gas line from Carthage, Texas, to the Perryville hub in Louisiana went into commercial service in 2007. The Southeast Supply Header, a pipeline project with Spectra Energy Corp., began operating last year. That project runs from Louisiana to Alabama.

CenterPoint, in a regulatory filing today, said it has entered into a continuous offering program with Citigroup Global Markets Inc. through which the company may sell as much as $150 million of shares.

Capital Spending

The company also said capital expenditures in 2009 will be an estimated $1.1 billion, up 4.3 percent from 2008. That includes a boost in spending on field services such as gas gathering to $277 million from $122 million last year.

The company’s gas utilities, which are in Texas, Arkansas, Louisiana, Minnesota, Mississippi and Oklahoma, have more than 3 million customers. The electricity CenterPoint delivers in Houston, the nation’s fourth-largest city, is generated by other companies and sold to consumers by retailers such as Reliant Energy Inc. and TXU Energy, which is part of Energy Future Holdings Corp.

To contact the reporter on this story: Edward Klump in Houston at eklump@bloomberg.net.

To contact the editor responsible for this story: Tony Cox at acox3@bloomberg.net.

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