Enstar parent earns $4.6 million in fourth-quarter; construction business hurts profits

Allen Baker, PNA contributing writer

Semco Energy Inc. reported a profit of $4.6 million for the fourth quarter, compared with a loss of $5.4 million a year ago. But net income from continuing operations declined compared with the $5.2 million net for the 2001 fourth quarter before some unusual items were taken out.

The Farmington Hills, Mich., company, lost $7 million in the third quarter. That’s normal because the company’s big business, gas distribution, is seasonal. The company owns Enstar in Alaska and a similar gas utility in Michigan.

Annual profits came in at $8.9 million, compared with a loss of $6.4 million in 2001. Factoring out unusual items, the company had a $4.8 million profit in 2001, so 2002 still showed an improvement.

But Semco said its construction business had a loss of $3.2 million for the fourth quarter, as customers deferred projects due to concerns about the weak economy. The company said it has ceased operations in some regions where results were poor.

Operating income from the gas distribution segment rose 7 percent to $21.0 million in the quarter, compared with $19.6 million a year ago. The improvement came from added customers, higher margins and lower expenses, plus elimination of some restructuring expenses and goodwill amortization that hurt results in 2001. The 2002 results suffered a bit due to a September decision by regulators in Alaska that cut customer rates for Enstar.

Smaller parts of the company made minor contributions to the fourth-quarter results. The propane, pipelines and storage division showed an operating income of $729,000, up 41 percent from the year-ago period. Information technology added $236,000, triple the number a year earlier, as the company cut advertising and other expenses.

Semco, which has 383,000 gas customers in Alaska and Michigan, had revenues of $146.3 million for the quarter, up 10 percent from $132.5 million a year ago. Annual revenues were $481.0 million, up 8 percent from 2001’s total of $445.8 million.