PPL (PPL) Q4 2008 earnings summary

Executive summary

• 2008 reported diluted EPS was $2.47 versus $3.35 in 2007; adjusted earnings from ongoing operations were $2.02 per share versus $2.60, below the initial-year forecast.

• Wholesale price volatility, extended unplanned outages at two power plants, and higher fuel and financing costs weighed on results amid the recession and severe financial-market disruption.

• Operating revenues rose to $8.044 billion from $6.498 billion, while net income declined to $930 million from $1.288 billion.

Financial highlights

• Operating income was $1.819 billion in 2008 versus $1.683 billion in 2007; income from continuing operations was $922 million versus $1.013 billion.

• Net income included $8 million from discontinued operations in 2008, versus $275 million in 2007; 2007 included gains from sales of Latin American businesses.

• Adjusted earnings from ongoing operations were $761 million, or $2.02 diluted EPS, versus $1.000 billion, or $2.60 per share, in 2007.

• Capital expenditures were $1.503 billion in 2008 versus $1.685 billion in 2007.

Outlook and guidance

• 2009 EPS guidance was $1.60–$1.90; 2010 EPS guidance was $3.60–$4.20, based on expected generation and regulated delivery earnings.

• For 2009, adjusted Supply earnings were forecast higher, International Delivery lower, and Pennsylvania Delivery lower than 2008, excluding special items and the cost-reduction initiative.

• About 95% of expected 2009 generation output was committed under sales contracts; forward sales and fuel procurement covered much of expected production and requirements.

• Planned 2009 capital spending was reduced, with $200 million of projects suspended or canceled; 2009–2013 capital expenditures were projected at $8.1 billion.