April 26, 2011 / 1:37 PM / in 6 years

UPDATE 3-TransAlta cautions on parts supply as profit jumps

* Q1 comparable EPS C$0.34 vs est C$0.30

* Net earnings up three-fold at C$204 mln

* Some parts sourced in Japan could be delayed (Adds CEO comments, details on new projects)

CALGARY, Alberta, April 26 (Reuters) - TransAlta Corp’s (TA.TO) first-quarter profit surged 240 percent on strong power markets and hedging gains, although it cautioned some new projects could be hampered by supply problems stemming from the disaster in Japan.

TransAlta, which runs coal and gas-fired power plants and renewable energy facilities in Canada and the United States, said on Tuesday it is formulating alternative plans for some power plant projects that were to have Japanese parts, such as turbines.

These include upgrades of the Keephills 1 and 2 coal-fired units in Alberta, slated for completion next year, Chief Executive Steve Snyder said.

“It’s too early to tell if their delivery schedules will be impacted, but we’re already working on contingency plans,” Snyder told analysts. “Once events in Japan have settled down, we’ll be able to finalize any required changes.”

He said any delays would have minimal impact on results.

TransAlta has not ordered parts from Japan for an upgrade of its Sundance 3 plant, also in central Alberta, but the impact of the Japanese earthquake and tsunami on world supply lines might have an impact, he said. Sundance 3 is also due to start up in 2012.

The company’s newest coal-fired project, the 450 megawatt Keephills 3 plant in partnership with Capital Power Corp (CPX.TO), is due to start up in the third quarter.

Earlier this year, TransAlta said it will shut down its aging Sundance 1 and 2 units, comprising 560 MW, after determining the boilers cannot be returned to service economically.

TransCanada Corp (TRP.TO), which has been buying the units’ output under a power purchase arrangement, has disputed TransAlta’s claim that they must be shut down and demolished. The issue is due to go before arbitrators in May, Snyder said.

In the first quarter, the company earned C$204 million ($213 million), or 92 Canadian cents a share, up from year-earlier C$60 million, or 27 Canadian cents a share.

Net income was boosted by C$129 million in mark-to-market power hedging gains.

Comparable earnings rose 25 percent to C$75 million, or 34 Canadian cents a share, beating the average Thomson Reuters I/B/E/S analysts’ estimate by 4 Canadian cents.

Snyder said operational results were bolstered by a combination of good plant reliability, strong Alberta power prices, strong hydroelectric margins and higher wind-power volumes.

TransAlta’s availability, or the amount of capacity that was operating, averaged 90.3 percent in the quarter, down from 91.4 percent, a year earlier.

The company’s shares were up 20 Canadian cents at C$20.75 on Tuesday on the Toronto Stock Exchange. That is down 5.7 percent from a year ago.

$1=$.095 Canadian Reporting by Jeffrey Jones and Gowri Jayakumar; editing by Peter Galloway

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