Jul. 25--Enron Corp. on Monday reported a 30 percent rise in second-quarter earnings, led by strong wholesale energy sales and growing online trading.
Enron and all the rest of the nation's natural gas and power companies had been expected to have a good second quarter because of an early-summer spike in commodities prices.
The surge in profits from these businesses helped the Houston energy company beat Wall Street's earnings expectations by 2 cents a share.
Enron reported net income of $289 million, or 34 cents per share, on revenues of $16.9 billion for the second quarter. That compared with net income of $222 million, or 27 cents, on revenues of $9.6 billion in the second quarter of 1999.
Analysts were expecting Enron to earn 32 cents per share, according to estimates compiled by First Call/Thomson Financial in Boston.
"This was an expected, positive surprise," said Carol Coale, natural gas analyst with Prudential Securities in Houston.
The market took the results in stride. Enron's shares closed Monday at $73, unchanged from Friday.
The company reported an almost 40 percent increase in wholesale energy volumes. Its EnronOnline Internet energy-trading system had a 92 percent increase in both volumes and deals compared with the first quarter.
The wholesale energy operations and services unit led the company's group results. This group consists of two primary lines of business: selling commodities such as natural gas, or managing such trades; and investing in energy projects, such as power plants.
Enron's wholesale energy operations and services unit had second-quarter operating income of $437 million, compared with $356 million in the second quarter of 1999.
Natural gas sales in North America were up 77 percent. Natural gas sales in Europe nearly tripled, primarily because of increased activity in the United Kingdom.
Worldwide, Enron's electricity sales were up 42 percent in the second quarter.
"We estimate that half of the profits of the commodity sales and service business came from Europe," Coale said.
Reports from London on Monday indicated that Enron is planning a substantial increase in its presence in the United Kingdom. According to those reports, Enron is in discussions with Canary Wharf Group to lease 1.4 million square feet of space at Canary Wharf, a commercial center in East London. Enron now employs about 2,000 people in London, 400 of whom are traders.
In its other units, Enron's retail energy services business had operating earnings of $24 million in the second quarter, compared with a $26 million loss in the same period last year. The unit provides energy management services to large commercial customers.
The company's transportation and distribution group, which includes Enron's natural gas pipelines and Portland General Electric, reported a second-quarter operating profit of $139 million, compared with $128 million a year ago.
The company is in the midst of selling Portland General Electric. That deal should close near the end of the year, Enron said.
The company's broadband services group -- which sells capacity on data lines -- had an operating loss of $8 million in the second quarter.
The company had warned analysts that the division would lose about $20 million a quarter as its ramped up the new business. But it also noted that part of the second-quarter loss would be offset by proceeds from the sale of a portion of the company's "dark fiber" -- or installed fiber-optic cable that is currently not in use.
"We have given (the analysts) guidance that we expect this unit to lose money for a couple of years as we grow the business," said Mark Palmer, an Enron spokesman in Houston.
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(c) 2000, Houston Chronicle. Distributed by Knight Ridder/Tribune Business News.
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