TransCanada PipeLines Ltd, the country's top pipeline company...
TransCanada PipeLines Ltd, the country's top pipeline company, said yesterday first-quarter earnings before unusual items were up 17 per cent because of lower interest charges, reduced costs and improved results from its power division.
The company also said it is boosting its second-quarter dividend by 12.5 per cent as a massive restructuring has put the firm on more stable footing. TransCanada expects to grow regardless of which pipeline is built to connect vast gas reserves in Alaska or Canada's Mackenzie Delta to feed North America's rapidly growing hunger for natural gas, said Hal Kvisle, the incoming chief executive.
The company owns part of a proposed pipeline to run down the Alaska Highway from Alaska across the Yukon. It would likely connect to TransCanada's existing system. The same situation would likely occur if a competitive project builds a pipeline up the Mackenzie River Valley to reach offshore gas reserves in the Beaufort Sea-Mackenzie Delta. Backers of this line also want to build a offshore spur to link to the Alaska's estimated 36 trillion cubic feet of gas in the North Slope.
"We feel expansion of our system...is going to be very cost competitive with the construction of any new lines," Kvisle said yesterday at a news conference following the annual meeting. "Our system has the advantage of delivering that gas to multiple markets whereas a bullet (dedicated) line takes it to just one market."
TransCanada, which has sold more than C$3.3 billion ($2.1 billion) in assets around the globe in the past 18 months to focus on pipelines and power generation in North America, had net income of C$166 million, or 35 Canadian cents per share.
In the same period last year, profits including unusual items were C$178 million, or 38 Canadian cents a share. Excluding asset sales and a tax adjustment, TransCanada earned C$142 million, or 30 Canadian cents a share, in the first quarter of 2000.
Revenue was C$7.9 billion in the quarter, up 155 per cent from C$3.1 billion last year, because of higher gas prices. At an otherwise quiet meeting, several disgruntled shareholders questioned multimillion bonuses given senior officials for overseeing the divestiture programme aimed at slashing bloated debt levels.
Chairman Dick Haskayne defended the payments, saying directors set ambitious restructuring targets but wanted to ensure key managers stayed. "I have nothing but good to say about how they have done," he said at the news conference. "Those targets were so tough, quite frankly, that we at the board while we hoped they would make it but I would have bet that they wouldn't have."
Randy Ollenberger, a Calgary analyst with Merrill Lynch Canada, said TransCanada's decision to focus on power as well as pipelines is paying off. "The transmission numbers were down while power picked it up," he said. The power division "does provide them with incremental upside."
The stronger financial position enabled the company to boost the second-quarter dividend to 22.5 Canadian cents, up from 20 cents a year ago. The company said last January that the payment for the first three months would also rise to 22.5 Canadian cents a share.
The higher distributions partly restore cuts in late 1999 that sliced off billions in market capitalization as investors abandoned the utility. Shares of the firm have gradually recovered, but the stock was down 14 Canadian
cents at $18.55 in afternoon trade in Toronto. The shares have ranged between a high of C$19.52 and a low of C$10.10 in the past year. TransCanada's equity has gained 8 per cent since the start of the year while the pipelines group on the Toronto Stock Exchange has slipped 3 per cent. Toronto's broader 300 composite index has declined about 11 per cent this year.