American Electric Power Co. Inc. said Tuesday its third quarter earnings increased by 25 percent as sizzling summer weather helped to boost electricity sales.
AEP said it had net income of $555 million, or $1.16 a share, in the quarter ended Sept. 30, compared with a profit of 443 million, or 93 cents a share, in same period a year ago. Revenue rose to $4.1 billion from $3.5 billion.
Michael G. Morris, chairman and CEO, said in a statement that demand from hotter-than-normal weather offset the continued slow economic recovery.
AEP shares rose 19 cents to $36.52, earlier hitting a new 52-week high of $37.16. The stock had traded in a range of $28.26 to $36.93 during the past year.
Excluding what the company described as minor changes in a cost estimate for an ongoing restructuring program, AEP earned $552 million in the quarter, or $1.15 per share.
Analysts polled by Thomson Reuters expected the company to earn $1.03 per share on revenue of $4.3 billion. Those estimates typically do not include special charges.
Sales to the company's big industrial customers went up 6 percent, rising from last year's low levels for a second straight quarter, Morris said. Demand from other sectors remained essentially flat.
AEP and other power companies have struggled to recover from drops in demand seen during the recession, particularly from plant shutdowns and other cutbacks in the industrial sector.
Besides the weather, rate changes also worked in AEP's favor during the second quarter, the company said.
"Every year we go in with a stack of rate case increases that we expect to receive, and each and every year we have not only been there but somewhat above it," Morris told analysts during a meeting in New York that followed the earnings release.
AEP narrowed its guidance for full-year earnings from continuing operations to a range of $2.95 to $3.05 per share, from the previous range of $2.80 to $3.20 per share. Analysts look for the company to post annual earnings of $3.03 per share.
In the meeting, executives announced a full-year 2011 earnings outlook from ongoing operations of between $3.00 and $3.20 per share, and announced plans to increase capital spending next year by about $150 million, to $2.6 billion. The capital budget is expected to rise to $2.9 billion for 2012.
"We think economic recovery will have a substantial positive impact" on the company going forward, Morris told the analysts.
Management will recommend that AEP's board increase the company's quarterly dividend by 9.5 percent, to 46 cents per share from 42 cents, Morris said.
AEP, based in Columbus, Ohio, is one of the nation's largest electric utilities with 5.2 million customers in 11 states.