NextEra Energy gets a break
FPL’s parent company raised its earnings forecast due to savings from reduced corporate tax rates.
FPL-parent NextEra Energy’s stock climbed 3 percent Friday, up $4.60 to $157.69 a share, after raising its earnings forecast due to savings from reduced corporate tax rates. The stock closed just short of its 52-week high of $159.40.
Juno Beach-based NextEra credited the U.S. tax cuts for its new forecast — and for Florida Power & Light Co.’s previously announced plan to pay $1.3 billion in Hurricane Irma-related recovery costs without a storm surcharge.
During a conference call with Wall Street analysts, Chairman and CEO James Robo said using the tax savings to pay for Irma storm recovery should help electric utility FPL “avoid a base-rate increase up to two additional years, to 2021 and 2022.” Ratepayers would have had to start paying the storm charges in March.
But NextEra Energy’s fourthquarter and year-end earnings reveal a wider picture of the tax law’s impact beyond ratepayers — a 45 cent-a-share benefit for stockholders in 2018.
The parent company’s fourthquarter profits more than doubled to $2.2 billion, or $4.55 a share, compared with $966 million, or $2.06 a share, for the fourth quarter of 2016. For the year, NextEra reported net income of $5.4 billion, or $11.38 a share, compared with $2.9 billion, or $6.25 a share, in 2016.
Yet earnings fell short of Wall Street analysts’ forecasts, on an adjusted basis.
NextEra revenue was $4 billion for the fourth quarter and $17.2 billion for the year, up from $3.7 billion in the year-ago quarter and $16.2 billion in 2016.
FPL reported fourth-quarter profits of $344 million, or 73 cents a share, compared with $371 million, or 79 cents a share, for the prior-year quarter. Revenue was $2.88 billion for the quarter and $11.97 billion for the year, compared with $2.56 billion for the year-ago for 2016.
NextEra said FPL’s growth was driven by investments in more efficient energy and an upgraded electric grid, but the utility also had more customers as Florida’s population grew. FPL, which powers more than half the state, added 55,300 customers from the final quarter of 2016 to 2017.
Last week, FPL announced that $1.3 billion in costs incurred from September’s Hurricane Irma recovery would be wiped out by its tax benefit under the new law, which chops the corporate tax rate. As a result, FPL said its typical monthly residential bill would drop to $99.37 from the current $102.72.
The Office of Public Counsel, the state watchdog agency over utilities, said in a Jan. 9 petition filed with the Florida Public Service Commission that the regulator has “an obligation to take action to pass tax-reduction benefits of the [tax] Act back to consumers.”
Based on the new tax law that reduces the corporate tax rate from 35 percent to 21 percent, NextEra said it expects a benefit of 45 cents a share in 2018, and for adjusted earnings per share to be in the range of $7.45 to $7.95 for 2018.
The company said it also was revising its long-term outlook to an annual growth rate of 6 percent to 8 percent through 2021 and now expects adjusted earnings per share to be in the range of $8.55 to $9.05 and $9.20 to $9.75, respectively.
Robo noted in NextEra’s news release that “we grew 2017 adjusted earnings per share by 8.2 percent and delivered a total shareholder return of more than 34 percent, outperforming both the S&P 500 and the S&P 500 Utilities Index by a wide margin.”
He added that “NextEra Energy is as well-positioned as it’s ever been with excellent prospects for growth.” quarter and $10.9 billion
mpounds@sunsentinel.com or 561-243-6650, twitter: @marciabiz