* EPS C$0.17 vs analysts’ estimate of C$0.25
* Drop blamed on poor market conditions
* Poor conditions may yield acquisition opportunities
* Shares down 1.7 percent (Adds CEO comments, details)
By Jeffrey Jones
CALGARY, Alberta, Oct 29 (Reuters) - TransAlta Corp TA.TO said on Friday its quarterly profit fell by half, a worse-than-expected result that Canada’s largest publicly traded power generator blamed on weak market conditions.
The company, which runs coal, gas and renewable power facilities in Canada and the United States, said net income fell to C$38 million ($37 million), or 17 Canadian cents a share, in the third quarter from C$66 million, or 34 Canadian cents a share, in the year-before quarter.
TransAlta had been expected to earn 25 Canadian cents per share, the average of analyst forecasts compiled by Thomson Reuters I/B/E/S.
Cash flow, a measure of the company’s ability to fund new projects, rose 19 percent to C$230 million, or C$1.05 a share, from C$194 million, or 98 Canadian cents a share.
Annual cash flow is now expected to be at the low end of the company’s C$800 million to C$900 million target range, executives said.
Chief Executive Steve Snyder said TransAlta’s power plants ran reliably, but that was not enough to offset the impact of eight-year-low power prices in Alberta and poor market conditions in the U.S. Pacific Northwest.
Lost output from the closure of TransAlta’s Wabamun 4 unit, west of Edmonton, Alberta, also pressured earnings.
“The results are disappointing from a financial perspective. But underneath the difficult market conditions, our operations continue to perform strongly,” Snyder told analysts.
Weak markets, due to poor natural gas prices and the sputtering U.S. economy, may last through 2011, Snyder said.
However, they may yield acquisition opportunities as prices for assets get more attractive, he said.
TransAlta has its eyes peeled for facilities that have long-term supply contracts as the company seeks to build its presence on the U.S. West Coast.
“I do think that given our balance sheet and our track record that our ability to finance transactions is quite good,” he said. “You never know until you test it, but right now I think the signs are good, the valuations are good.”
Despite soft markets, the company said it would proceed with a 15 megawatt efficiency upgrade at its Sundance 3 coal unit in Alberta. The upgrade is slated to be complete by the end of 2012 at a cost of C$27 million.
In the quarter, TransAlta’s availability, or the amount of its power-generating capacity that was running, averaged 91 percent in the quarter, up from 83.9 percent, due to fewer maintenance outages at the Sundance plant in Alberta and at its Centralia facility in Washington state.
TransAlta shares were off 36 Canadian cents, or 1.7 percent, at C$20.55 on the Toronto Stock Exchange on Friday.
$1=$1.02 Canadian Reporting by Jeffrey Jones; editing by Peter Galloway