Constellation Energy Group Inc. reported yesterday a 32 percent jump in net income in the second quarter, as the Baltimore-based energy company signed on new customers in the wholesale and retail electric markets.
Constellation, the parent of utility Baltimore Gas and Electric Co., also raised its earnings projection for the year.
The energy company earned $128.2 million, or 76 cents per share, in the three months that ended June 30, compared with $96.8 million, or 58 cents per share, in the second quarter of 2003. Excluding special items, per share earnings were 55 cents, beating the average estimate of 36 cents by analysts tracked by Zacks Investment Research.
The company said it has been steadily gaining market share from competitors as it sells power on the wholesale market to utilities and others as well as on the retail market to commercial customers such as Ford Motor Co.
As a result, Constellation said, it expects to earn $3.15 to $3.25 per share for the year, up from its previous guidance of $3.05 to $3.20 per share, which would mean growth of as much as 18 percent.
"That's a big number in an environment where companies in our space are typically growing 4 or 5 percent," said Mayo A. Shattuck III, Constellation's chairman, president and chief executive officer. "We're seeing a trend where more companies are outsourcing their power procurement, and we're playing right into that trend."
The growth in business, from serving 6,000 megawatts of peak electrical load three years ago to 28,000 megawatts of peak load, has come about as Constellation has been able to lower costs by increasing its scale.
The company has seen growth in both its competitive electric supply business and power generation business, in which it owns and runs power plants. Constellation added to its earnings in the second quarter by closing the purchase of the Ginna Nuclear Power plant in New York.
Even BGE performed well, reporting earnings of 13 cents per share, beating the company's earnings projections of up to 12 cents per share, because of warmer weather that kept air conditioners humming and higher usage in the Central Maryland territory.
The company is ahead of its goal of originating $289 million in new business this year, with more than half - 62 percent - of that new business already locked in, much of it in long-term contracts.
"An important thing about this business is we're entering into contracts with customers and locking up earnings for future years," said E. Follin Smith, chief financial officer. Shares of Constellation closed at $38.55, up 65 cents.