Belco Holdings president Garry Madeiros said the company anticipates "good" fourth quarter results, but reiterated warnings the company is also preparing for the possibility that the Island could face "severe economic recession" in the coming year.

Mr. Madeiros said: "We are confident that we will meet and exceed our budget for the fourth quarter." But, looking forward Mr. Madeiros indicated the company will carefully monitor earnings and expenses.

In a quarterly letter to shareholders, Mr. Madeiros said: "While the Bermuda economy was already showing signs of a potential slowdown, the events of September 11 have made certain that we will face a severe recession in 2002 as the decline in our tourism industry is accelerated."

In light of the potential for continued economic downturn, Mr. Madeiros said the company would look at reducing expenses if energy usage was to plummet. "We must prepare ourselves and the Country for a severe economic downturn. (And) we have scripted a number of possible revenue scenarios and determined the appropriate cost reduction measures that we will implement as and when necessary and at the levels required to minimise the impact to our business," Mr. Madeiros said.

When asked what cost cutting measures might be put in place, Mr. Madeiros said he would not speak in specifics, but he did say there were no job cuts planned, and that capital projects would be the first area to come under scrutiny.

"We would first look at capital projects; areas where we can ask do we need to spend at this time" Mr. Madeiros said. But, the utilities boss added that the company - which includes the Bermuda Electric Light Company (Belco), Bermuda Gas and Besco - must also take in to account the affect of capital projects on the community:

"We all have challenges, both Government and businesses, in achieving a balance of the need to control spending and the need of jobs and people needing work to do. That has to be looked at carefully; the overall impact on the community if we delay capital projects," Mr. Madeiros said.

Beyond capital projects, Mr. Madeiros said the company might look at costs associated with payroll, such as overtime. He said that when energy consumption is at normal levels, overtime is required "as part of being sensitive to customer's needs." But, he said that were energy usage levels to drop, several areas would have to be looked at, including the level of overtime allowed.

Mr. Madeiros said the company, in 2002, would continue "our shift toward a more focused, more effective, and more productive organisation." He said this has been an ongoing process over the past eight years which has resulted in a "reduced staff contingent and reduced operating expenses."