Avista profits diminished by trading subsidiary
Avista Corp.’s energy trading subsidiary lost money during the first quarter because of volatile natural gas and electricity prices, dragging down the corporation’s first-quarter profits.
The company’s preliminary report Wednesday did not include revenue and net income numbers, but it did report per-share earnings for the first three months of the year had fallen to 26 cents – down from 64 cents a year earlier.
While the energy trading arm delivered poor results — a 14-cent-per-share loss compared with a 10-cent contribution a year ago — the company’s core utility business also recorded disappointing numbers.
The utility contributed 37 cents per share, down from 53 cents a year ago due to higher operating costs and other factors.
The news comes a day after the company announced it is selling its Avista Energy business to Coral Energy Holding L.P., a unit of global oil giant Royal-Dutch Shell.
Though a transaction price hasn’t been settled, the deal is expected to be reflective of the trading subsidiary’s $202 million book value.
The sale of Avista Energy ends a decade of speculative energy trading for Avista. Though the subsidiary represented a higher business risk for the company, it has been profitable.
In its 10 years of operation, Avista Energy earned profits of about $250 million. The unit sent about $182 million of that upstream in the form of dividends to the corporation over the past six years, said spokeswoman Jessie Wuerst.
Chairman and CEO Gary Ely said the company is not yet confirming or revising its earnings guidance for the rest of 2007. He is expected to offer such information to analysts and shareholders after Avista Energy is sold.
Money from the sale is expected to be spent within Avista’s utility operations.
Shares of Avista were down 16 cents Wednesday on the New York Stock Exchange.