The immediate owner of Barbados’ lone electricity company has evaded the hard times which has left many of its private sector counterparts financially crippled.
Today, two days after the news was officially delivered to shareholders attending Light & Power Holdings Limited’s annual general meeting, it emerged that the company earned $44.5 million in profits in 2012, an increase of about $9.4 million or 27 per cent.
And while the news will be welcomed by local stock owners, including the National Insurance Board, who will be paid an interim dividend of 13 cents per share tomorrow, the biggest beneficiary is expected to be LPH’s Canadian parent Emera Inc. which owns about 80 per cent of the Barbados company.
Additionally, despite the improved financial performance, LPH subsidiary Barbados Light & Power Company Limited has placed its expansion plans under review following reduced electricity sales last year and an expected reduction in growth this year.
With the ongoing world recession, 2012 was a challenging year for Barbados and the region. We are therefore pleased to report that LPH’s financial performance remained stable in spite of the difficult economic climate.
“Consolidated Net Income for 2012 was $44.6 million compared to $35.1 million over 2011. This increase is mainly attributable to the favorable increase in the fair value of the available-for-sale assets of $4.3 million related to investments in the Self Insurance Fund, as well as the share of profits of $3.9 million from the acquisition of Emera St. Lucia,”
Managing Director Peter Williams and Chief Financial Officer Hutson Best said in explaining the financial performance to shareholders.
Other positive aspects of LPH’s financial year included a $19 million reduction in its total operating expenses, and a $14.4 million increase in cash from operations.
Officials appeared worried, however, by the fact that main subsidiary BL&P’s sales declined for a second successive year, although they said the company “was able to manage its expenses carefully so as to partially counteract that decline”. In their management discussion and analysis, Williams and Best said: “Electricity sales declined by 1.6 per cent to 918.1 million kilowatt hours in 2012 from 933.3 million kilowatt hours in 2011, despite the increase in the customer base to 124,000 in 2012 from 123,000 in the corresponding period.
“The increase in customers was offset by the decline in usage, increased energy conservation efforts, and the reduction by 2.1 per cent in average daily temperatures in 2012 over 2011.
Total operating revenue for 2012 was $593.2 million a decrease of $14.1 million when compared to the 2011 result of $607.3 million. The decrease of 2.3 per cent over the corresponding period was mainly the result of fuel prices.”
In light of the declining electricity sales BL&P’s management is now reviewing its generation expansion plan.
“BLPC’s customer base is fairly diversified in terms of customer groups, but is concentrated in the island of Barbados and as such significantly exposes the group to the associated risks of a single geographic and economic location,” LPH officials said.
“Circumstances that could affect the group’s ability to generate liquidity from this source include general economic downturn in Barbados, the loss of one or more large customers, regulatory decisions affecting rates and changes in environmental legislation,” they added. (SC)