February 6, 2008 / 12:47 PM / 10 years ago

UPDATE 2-Enbridge profit jumps, raises dividend

(Recasts with additional details and comments. Changes dateline, previous TORONTO.)

By Scott Haggett

CALGARY, Alberta, Feb 6 (Reuters) - Fourth-quarter profit at Enbridge Inc (ENB.TO), Canada’s No. 2 pipeline operator, jumped 45 percent, the company said on Wednesday, pushed higher by cold weather, which boosted demand at its gas distribution business, and by lower tax rates.

Enbridge, which is in the midst of a multibillion-dollar expansion of its pipeline network to ship burgeoning supplies of Alberta oil sands crude to U.S. refiners, also raised its dividend, bumping up the quarterly payout by 7.3 percent to 33 cents a share.

The company earned C$248.6 million, or 69 Canadian cents a share, for the quarter, up from C$171.1 million, or 49 Canadian cents, in the fourth quarter of 2006.

The profit included C$56.3 million in gains from tax changes as well as a number of other one-time gains and charges. Without those items, adjusted operating earnings rose 15 percent to C$198 million, or 56 Canadian cents a share, from C$172 million, or 50 Canadian cents, in the year-earlier quarter.

The operating results beat the 50 Canadian cents per share average forecast among analysts polled by Reuters Estimates.


Enbridge, which has about $12 billion in new projects and expansion of its existing system in the works, said on Wednesday it will need to raise about C$6.5 billion in additional cash to fund its capital program over the next four years .

While most of that will come from debt, the company said it will need to raise C$1.5 billion over the four years.

It said it can meet that call through asset sales, selling stakes in some of its operations, or by issuing what it called hybrid securities.

Selling new shares to raise the cash is also possible, though Enbridge said it was the company’s least likely choice because it believes its shares are undervalued.

“Don’t take it as a signal that we are going to issue equity,” Pat Daniel, Enbridge’s chief executive, said on a conference call.

Daniel said the plans for raising the cash are in the early stages and it is not “an urgent need”.

Enbridge forecasts earnings for 2008 of between C$1.80 and C$1.90 a share. It earned C$636 million, or C$1.79 per share, in 2007. The company said its profit for this year will be cut because of higher taxes on part of its pipeline system but reiterated that it expects much improved earnings in future years as it completes its projects.

“We still expect to grow earnings per share by up to 5 percent in 2008,” Daniel said. “When the bulk of the growth projects come into service, mainly in 2009 and 2010, we expect a steep ramp up in earnings and cash flow.”

Revenue for the three months ended Dec. 31 rose to C$3.2 billion from C$2.79 billion.

For the year, Enbridge reported net income of C$700.2 million, or C$1.95 a share, up from C$615.4 million, or C$1.79 a share, in 2006.

Operating earnings for 2007 rose to C$198.6 million, or 56 Canadian a share, from C$172.4 million, or 50 Canadian cents a share.

Full-year revenue rose to C$11.92 billion from C$10.64 billion in 2006.

Enbridge shares fell 41 Canadian cents to C$39.79 on the Toronto Stock Exchange. ($1=$1.00 Canadian) (Additional reporting by John McCrank in Toronto; Editing by Peter Galloway)

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