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Ascendant earnings drop as recession continues to bite

Earnings at the holding company for power firm BELCO dropped by $3 million in the first half of the year, according to figures released today by the Ascendant Group.

And Ascendant President Walter Higgins said a decline in electricity sales — caused by continued business closures and belt-tightening at surviving firms — had contributed to the drop.

Net earnings to June fell to $1.8 million (or 13 cents a share) — but the half-year report stressed that the bulk of the company's earnings are produced in the second half of the year.

At BELCO, electricity sales revenues, excluding the cost of fuel, were “essentially unchanged” at almost $67 million, year on year.

But total kilowatt sales fell by 3.7 percent compared to same period last year, with the majority of the drop attributed to a decline in business demand.

Ascendant President Walter Higgins, writing in the foreword to the report, said: “Kilowatt hour sales to residential customers increased a modest 0.5 percent — however, commercial sales declined as the trend of business closures and downsizing continued due to the challenging economy.”

And he added that domestic customers continued to conserve energy, putting further pressure on sales.

Mr Higgins said that the Ascendant Group's revenue from propane gas sales through Bermuda Gas and Utility Co. — mostly to commercial customers — had also dropped by $1.2 million (17.5 percent), which he blamed on increased competition.

He added: “Bermuda Gas revenues for the first half of 2013 were also negatively affected by the need to reduce commercial gas prices both to retain existing customers and to entice former ones to reconsider doing business with Bermuda Gas and take advantage of its superior service and support.”

But Mr Higgins said Ascendant's policy of diversification had paid dividends, with $3.6 million in extra revenue coming from facilities maintenance management firm IFM and air conditioning company Air Care.

And he warned that costs from Ascendant's defined benefit pension plan, already partly frozen, would continue to be problem unless they were addressed.

He added the company was also looking at ways to “mitigate” increasing healthcare costs.

Mr Higgins said: “We believe that the remainder of 2013 and the foreseeable future will be challenging as Bermuda continues to find a solution to the current economic situation.

“Regardless, we are still optimistic that, through continued wise investment in our operators, careful management of expenses and implementation of new strategies to meet the energy needs of our customers, we can contribute to the improvement of Bermuda's economy and to improved results for our shareholders.”

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Published September 18, 2013 at 4:34 pm (Updated September 18, 2013 at 4:36 pm)

Ascendant earnings drop as recession continues to bite

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