Skip to comments.FirstEnergy to cut 400 jobs by 2016, cites lower prices, competition
Posted on 11/08/2012 11:05:40 PM PST by My Favorite Headache
AKRON, Ohio -- FirstEnergy expects to cut up to 400 jobs by 2016 as it struggles to stay profitable in a lackluster economy that has led to continued low demand and low power prices.
Anthony Alexander, chief executive officer, revealed the coming job cuts Thursday during a public teleconference with financial analysts about the company's third quarter financial results.
He said the reductions would be made through "normal attrition" beginning next year.
FirstEnergy issued pink slips a week ago to 142 employees, but the actual number of positions eliminated was 200. The 58 other were open spots.
Headquartered in Akron, the company employs about 17,000 people in 10 companies from Ohio to the East Coast. FirstEnergy Corp.'s third-quarter net profits were down nearly 20 percent compared with the same period in 2011.
In the report released before the start of business Thursday, the company said its net income for the three months ended Sept. 30 was $425 million, or $1.01 per share, on total sales of $4.3 billion.
That compares with net income of $530 million, or $1.27 per share, in the third quarter of 2011, on total sales revenue of $4.7 billion.
Excluding one-time-only adjustments and expenses during the quarter, the company said it would have earned $1.11 per share, compared with $1.39 per share during the third quarter of 2011.
FirstEnergy Solutions, the company's unregulated subsidiary, was the one bright spot. FES sells electricity directly to consumers and other customers at retail rates, locking some customers into seven-year contracts.
"Our retail strategy focuses on optimizing our mix," Alexander said. "We expect to grow our direct retail sales by 12 percent in 2013."
As for the seven-year contracts, Alexander said the company is extending the offers that FES began making in August with an Oct. 31 enrollment deadline.
FES has increased its customer base by moving into other areas traditionally served by other utilities when the industry was regulated.
Mark Clark, chief financial officer, told the analysts that FES increased retail sales by 9 percent in the third quarter, primarily by moving into central and southern Ohio.
The company also has been working to persuade entire cities to sign contracts for their residents. That takes a ballot issue, and during the last year, the company added 43 Ohio cities and 81 cities in Illinois.
The big target now is Chicago.
"This week's election governmental aggregation was approved in about 200 Illinois communities," he said, saying the company would actively sell in those new cities.
The company also lowered its final 2012 guidance and 2013 guidance about how much money it expects to earn.
The company lowered what it thinks its 2012 earnings will be to $3.30 to $3.40 per share, down from its previous range of $3.30 to $3.60.
For 2013, the company said it expects unadjusted, or gross, earnings to range between $2.85 and $3.15 per share.
"With respect to the economy, we certainly anticipated that it would be more robust when we developed our initial forecast for 2012 and 2013," Alexander said. "We continue to see very slow, even stagnant growth."
Competition from other power companies burning natural gas instead of coal has only exacerbated FirstEnergy's pain.
This fall, the company idled one of its largest coal-fired power plants, blaming lower overall demand for power and competition from cheaper, gas-fired power plants.
Total power deliveries decreased 4 percent in the quarter. Residential deliveries declined by 4 percent, primarily due to milder weather compared with the third quarter of 2011. Commercial deliveries decreased 3 percent, while industrial deliveries decreased 5 percent.
MFH keep up the great work.
If you have a ping list pls add me to it.
Keep up the pressure. its noticed by the revenge party.
HOORAY FirstEnergy! Prepare. Persevere.
The cost of building/financing all their nuclear plants got shoved up their customers' asses, then they went to form a subsidiary that plays in the market with those assets for profit.
Look at the millions FE donates to political parties, spends on Lobbying, and sits on "Energy Task Forces", and you'll see what "Government" is about (a business that uses taxpayers to fund private profit).
Tony Alexander is paid multi-million dollar bonuses, and the corporate Officers earn million dollar bonuses, too, while the consumer foots the bill. Even when they shut down 7 states and half of Canada with the Blackout of 2003 with their incompetence, they had the political connections to escape without major penalties.