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PPL's ongoing Q4'17 earnings drop YOY, but beat estimates

PPL Corp. on Feb. 22 reported fourth-quarter 2017 earnings from ongoing operations of $384 million, or 55 cents per share, down from $409 million, or 60 cents per share, a year ago.

Despite an 8% decrease, the most recent quarter EPS result beat the S&P Capital IQ normalized consensus estimate of 48 cents.

On a segment basis, the U.K. regulated business recorded 29 cents per share in earnings from ongoing operations in the fourth quarter of 2017, down from 40 cents per share in prior-year period. The company cited higher U.S. income taxes due to a fourth-quarter 2016 benefit recorded for the carryforward of foreign tax credits, lower foreign currency exchange rates and lower sales volumes, among the factors driving the earnings result.

The Kentucky regulated segment, which consists of the operations of Louisville Gas and Electric Co. and Kentucky Utilities Co., contributed fourth-quarter 2017 EPS from ongoing operations of 14 cents, up from 12 cents in the 2016 fourth quarter. The increase was driven primarily by higher base electricity and gas rates and higher sales volumes.

The Pennsylvania regulated segment, representing the electricity transmission and distribution operations of PPL Electric Utilities Corp., booked 14 cents per share in fourth-quarter 2017 earnings from ongoing operations, compared with 11 cents per share a year ago. The company attributed the increase to lower operation and maintenance expense and higher transmission earnings.

PPL posted fourth-quarter 2017 operating revenues of $1.93 billion, compared with $1.83 billion in the same quarter in 2016, while operating income improved year over year to $793 million from $714 million.

On a GAAP basis, the company reported fourth-quarter 2017 earnings of $78 million, or 11 cents per share, down from $465 million, or 68 cents per share, in the year-ago quarter. Earnings for the most recent quarter included net special-item after-tax charges of $306 million, or 44 cents per share, due primarily to the impact of the U.S. tax reform.

For the full-year results, PPL reported earnings from ongoing operations of $1.55 billion, or $2.25 per share, in 2017, compared with $1.67 billion, or $2.45 per share, in 2016. The S&P Capital IQ normalized consensus estimate for 2017 was $2.18 per share.

Operating revenues totaled $7.45 billion in 2017, compared with $7.52 billion a year ago, while operating income increased year over year to $3.07 billion from $3.05 billion.

Along with its financial results, the company announced a 2018 earnings forecast range of $2.20 per share to $2.40 per share, with a midpoint of $2.30 per share. PPL also now projects 5% to 6% compound annual earnings growth per share from 2018 through 2020, off of its 2018 midpoint.

The company also increased the quarterly common stock dividend to 41 cents per share, or $1.64 per share on an annualized basis. The quarterly dividend is payable April 2 to share owners of record March 9.