Progress Energy Earnings Sluggish In 1st Quarter

Florida's sluggish real-estate market contributed to a 24 percent drop in first-quarter earnings at Progress Energy, the company reported Thursday.

Net income for the Raleigh, N.C.-based energy company fell from $275 million, or $1.08 a share, in the first quarter of 2007 to $209 million, or 81 cents a share, in the first quarter of 2008.

Executives attributed the downturn to lower electricity sales caused by milder weather in the Southeast and lower-than-expected customer growth in Florida, where the company operates St. Petersburg-based Progress Energy Florida.

Overall, Progress Energy provides electricity to 3.1 million customers in the Carolinas and Florida, including Pasco, Pinellas and a portion of Hillsborough County. Progress' Florida utility, which is based in St. Petersburg, reported first-quarter ongoing earnings of 26 cents a share, down from 24 cents during the same quarter last year. In Florida, the company added 7,000 customers over the past year.

Paul Franzen, energy industry analyst for Edward Jones, said the company's decrease in earnings is "not a reason for long-term investors to get out of the stock." That's because earnings from the company's ongoing operations are still healthy, Franzen said.

First-quarter ongoing earnings were $148 million, or 57 cents per share, compared to $149 million, or 59 cents per share, for the same three months last year. Earnings from those businesses totaled 59 cents a share for the quarter, down from 57 cents in the same quarter last year.

The bulk of the decline is tied to the company's discontinued operations, Franzen said, or assets the company has recently sold to reduce debt, including the $94 million completion of a deal to sell coal mines and river terminals associated with its synthetic fuels business.

"They've lowered the overall risk profile of the company," he said. "And by paying down debt, they've also improved the financial strength of the company."