Belco Holdings Ltd.?s profits fell by 23 percent for 2003 ? after the electricity company?s bottom line was hit by Hurricane Fabian.

This is much higher than the five percent reduction predicted by the company for 2003 earlier this year when it said it would be hit not only by bills for repairing lines, but also the added cost of hotels and restaurants being closed due to damage.

Yesterday the company reported its consolidated net earnings fell by $5.2 million from $22.5 million in 2002 to $17.3 million in 2003.

?This significant decrease of 23.3 percent in one year is made up of two components,? said Garry Madeiros, president and chief executive officer of Belco said in a letter to shareholders.

?The first is the one-time gain of $2,483,513 experienced in 2002 on the sale of Quantum Communications Ltd. and Fibre.Com Ltd.

?The second is the restoration expense of $3,353,000, which the company incurred as a result of Hurricane Fabian?s visit.?

But Mr. Madeiros pointed to an increase in share price as good news.

The price was up 15. 6 percent from $30.50 at the end of 2002 to $35.25 by the end of 2003 ? and said that as of March 15, the market price per share was $41.50.

In his report he said Belco?s profits had dipped by over 16 percent or 3.1 million to $16,322,519, compared with $19,505,653 in 2002, as a result of Hurricane Fabian restoration expenses of $3,353,000.

He added that total electricity sales revenue rose 8.3 percent in 2003 to $144,136,656 up from the $133,112,648 achieved in 2002.

And of that increase, $6,408,771 was a direct result of fuel adjustment revenue increasing to $21,911,509 from $15,502,738.

The remainder of the sales revenue increase resulted from a 2.7 percent increase in kilowatt hour sales.

Mr. Madeiros said that expenditures increased in 2003, particularly in Belco?s two major operating areas ? energy supply and energy delivery.

In energy supply, fuel cost was the most significant expense and the price of fuel averaged $52.09 per barrel compared to $45.67 in 2002, resulting in extra fuel costs of $6,408,771.

He also pointed to increased generation demand on Belco?s power plant required the running of less efficient gas turbine engines to meet the demand.

?Both of these factors contributed to $2,919,576 additional costs,? he said.

?Also contributing to increased cost was the need for energy supply to complete seven major engine overhauls in 2003, compared to six in 2002.?

Energy delivery expenses increased mainly due to the devastation caused to Belco?s overhead distribution system as a result of Hurricane Fabian and the company spent $3.3 million in restoration costs as a result of the storm, and a further $1.1 million in capital costs during a four-month system rehabilitation period to restore the system to full strength.

Mr. Madeiros said that during 2004 the company would be looking at ways of improving service and cutting costs through process teams to look a each of the company?s operating groups.

He said: ?The process teams, guided by our four-person process office, are charged with looking at important segments of our business to map how things are done now, and then to develop recommendations for workflow improvements that will enhance employee job satisfaction, optimise use of resources and, most importantly, contribute to greater customer satisfaction.?

Bermuda Gas & Utility Company Ltd. ended 2003 with record net earnings of $1,158,931, closing 8.2 percent higher than the $1,070,780 earned in 2002. This was supported by improved performance in all categories of operations said the letter to shareholders.

For the two months ended February 2004, Bermuda Gas total sales trailed the same period in 2003 by 0.2 percent primarily due to some larger commercial customers remaining closed while hurricane damage repairs continue.

Mr. Madeiros said BELCO Energy Services Company (BESCO) had an ?acceptable? year in 2003 with net earnings of $176,976, down from 2002 earnings of $270,508.

The board of directors declared a dividend of 38.5? per share for the first quarter of 2004.