TransAlta slashes dividend, reports quarterly loss; shares plummet

Thu Feb 20, 2014 11:56am EST
 
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(In U.S. dollars unless noted.)

CALGARY, Alberta Feb 20 (Reuters) - Power plant operator TransAlta Corp reported a fourth-quarter loss due to lower power prices and unplanned outages, and said it would cut its quarterly dividend by 38 percent, sending its share plummeting 10 percent in midday trading.

The company, which operates power plants in Canada, the United States and Australia, also agreed on Thursday to sell its stake in several U.S. plants to a partner for $193.5 million.

TransAlta lost C$66 million ($59.8 million), or 25 Canadian cents a share, in the final quarter of 2013, compared to a profit of C$39 million, or 15 Canadian cents, a year earlier.

Comparable earnings, which exclude most one-time items, fell to C$1 million, or break-even per share, from C$55 million, or 15 Canadian cents. The results were well below analysts' average estimate for a profit of 20 Canadian cents a share, according to Thomson Reuters I/B/E/S.

TransAlta slashed its quarterly dividend to 18 Canadian cents from 29 Canadian cents, news that sent its shares plummeting more than 10 percent in midday trading to C$13.32 on the Toronto Stock Exchange.

Dawn Farrell, TransAlta's chief executive, said the company's results were hurt by poor results from its coal-fired power plants, particularly its aging Centralia plant in Washington state.

She said the dividend cut and asset sale would shore up the company's balance sheet and allow TransAlta, whose shares have fallen by nearly a third since the start of 2012, to grow again.

"We are fully aware that value for shareholders has not increased during this period," Farrell said on a conference call. "Offsetting the headwinds of lower pricing in Centralia and the additional capital required in Alberta coal has not allowed us to grow overall cash per share."

The company said it would sell its 50 percent share in CE Generation, which operates power plants in five U.S. states, to its partner MidAmerican Energy Holdings Co, owned by Warren Buffett's Berkshire Hathaway.

($1 = 1.1037 Canadian dollars) (Reporting by Scott Haggett; Editing by Bernadette Baum)