REAFFIRMS 2009 EARNINGS GUIDANCE
ST. LOUIS, MO., Aug. 6, 2009—Ameren Corporation (NYSE: AEE) today announced second quarter 2009 net income in accordance with generally accepted accounting principles (GAAP) of $165 million, or 77 cents per share, compared to second quarter 2008 GAAP net income of $206 million, or 98 cents per share. Excluding certain items in each year, Ameren recorded second quarter 2009 core (non-GAAP) net income of $161 million, or 75 cents per share, compared to second quarter 2008 core (non-GAAP) net income of $142 million, or 67 cents per share.
The increase in core (non-GAAP) earnings per share in the second quarter of 2009 over the same period in 2008 was principally because of new utility service rates in Illinois, effective October 1, 2008, and in Missouri, effective March 1, 2009, as well as lower plant operations and maintenance expenses and warmer weather. The favorable earnings impact of the above factors was reduced by higher net fuel costs and the absence this year of the 2008 portion of a lump-sum payment from a coal supplier received last year as a result of the premature closure of a mine and the termination of a contract, among other items.
“I am pleased to report that our second quarter earnings were in line with our expectations, and the company’s strong operating performance allows me to reaffirm our core 2009 earnings guidance of $2.70 to $3.05 per share,” said Thomas R. Voss, president and chief executive officer of Ameren Corporation. “Rate relief, cost control and actions taken to reduce our exposure to price fluctuations in the wholesale energy markets are helping us weather difficult economic and market conditions in 2009.
“We are realizing the benefits from steps we took, beginning in late 2008, to reduce our planned capital and operations and maintenance costs,” Voss added. “As we look ahead to 2010 and beyond, we are identifying further opportunities to tighten our belt for the good of all stakeholders. In total, we have identified approximately $2 billion of opportunities to reduce capital expenditures for
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2010 through 2013, as compared to earlier plans. Notably, in our non-rate-regulated, or merchant, generation business, we have eliminated approximately $1 billion of planned capital expenditures from this period. In our regulated businesses, we have also identified and are carefully evaluating projects that may be eliminated or deferred to help our customers manage their costs in these tough economic times and further strengthen our financial profile. However, we will not reduce costs to a level that would prevent us from providing safe and reliable service. We are also looking carefully at planned operations and maintenance expenditures across our organization, but especially in our merchant generation business and business support functions. We are aggressively managing power plant outage and labor costs, among other things. Our objective is to significantly lower 2010 non-fuel operations and maintenance costs, relative to the 2008 level, in our merchant generation business.”
In the second quarter of 2009, warmer weather contributed to a 4% increase in kilowatthour sales to residential customers and a 1% increase in kilowatthour sales to commercial customers, compared to the year-ago quarter. On a weather-normalized basis, Ameren estimates that second quarter 2009 residential and commercial kilowatthour sales were virtually unchanged from the year-ago period. The slowing economy continued to affect the level of regulated electric sales to industrial customers, resulting in a 13% decline from the year-ago quarter, excluding the impact of reduced demand from AmerenUE’s largest customer, the Noranda Aluminum, Inc., smelter plant in New Madrid, Missouri. Noranda’s plant sustained damage because of a power interruption on non-Ameren-owned power lines during a severe January 2009 ice storm. Including Noranda, regulated industrial electric sales declined 17% in the second quarter of 2009, as compared to the year-ago quarter.
Despite solid operating performance, second quarter 2009 merchant generation output declined 4%, compared to the year-ago quarter, as lower power prices reduced the periods of time when the plants could profitably sell power in the open market. However, the segment’s core earnings were not significantly affected due to proactive forward hedges of 2009 generation in prior years at higher-than-current market prices.
The following items are excluded from second quarter 2009 and second quarter 2008 core (non-GAAP) earnings, as applicable:
| · | The net costs associated with the Illinois comprehensive electric rate relief and customer assistance settlement agreement reached in 2007 reduced net income by $4 million in the second quarter of 2009 and by $8 million in the second quarter of 2008. |
· The net effects of mark-to-market activity increased net income by $8 million in the second quarter of 2009 and by $48 million in the second quarter of 2008.
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| · | The 2009 portion of a lump-sum payment in the second quarter of 2008 from a coal supplier benefited second quarter 2008 net income by $16 million. This portion of the payment was related to expected higher 2009 fuel costs for merchant generation as a result of the premature closure of a mine and termination of a contract. |
| · | The estimated minimum benefit of an accounting order from the Missouri Public Service Commission that gave AmerenUE the ability to seek recovery in its then-pending electric rate case of all, or a portion, of AmerenUE’s 2007 severe storm costs benefited second quarter 2008 net income by $8 million. |
Net income in accordance with GAAP for the first six months of 2009 was $306 million, or $1.43 per share, compared to $344 million, or $1.64 per share, in the first half of 2008. Excluding certain items in each year, Ameren recorded first half 2009 core (non-GAAP) net income of $275 million, or $1.29 per share, compared to first half 2008 core (non-GAAP) net income of $276 million, or $1.31 per share. A reconciliation of GAAP to core (non-GAAP) earnings per share is as follows:
