Thanks largely to a U.S. Supreme Court ruling that the company’s United Kingdom windfall tax is creditable against its U.S. income taxes, PPL Corp. of Allentown is reporting dramatically higher earnings for the latest quarter.
The company also has increased its 2013 earnings forecast.
The company is reporting second quarter earnings of $405 million, or 63 cents per share, as compared to $271 million, or 46 cents per share, for the same quarter in 2012.
In May, the U.S. Supreme Court ruled unanimously in favor of PPL in the company's claim of a credit against its U.S. income tax for a "windfall tax" paid to the government of the U.K. in 1997.
The U.K. government imposed the one-time windfall tax in 1997 on 32 companies that the government had privatized between 1984 and 1996, including the electric utility company currently known as Western Power Distribution. PPL purchased a share of WPD in 1996 and is now the sole owner.
As a result of the decision, PPL was allowed to record a tax benefit in the second quarter of about $40 million.
For the first six months of 2013, however, PPL recorded nearly the same amount of earnings, year over year. The 2013 half-year total is $818 million, or $128 per share, compared to $812 million, or $1.39 per share, for the first six months of 2012.
"We continue to see solid earnings growth from our three regulated business segments, and our competitive energy supply business is managing its operations effectively," said William H. Spence, PPL's chairman, president and CEO. "Our strong performance through the first two quarters and our expectations for the balance of the year give us confidence to increase our 2013 earnings forecast."
PPL has increased its 2013 forecast of earnings from ongoing operations to a range of $2.25 to $2.40 per share, with a midpoint of $2.32 per share.
The previous forecast range was $2.15 to $2.40 per share from ongoing operations.
The 2013 forecast of reported earnings is $2.33 to $2.48 per share, reflecting special items – notably the tax benefit – recorded through the second quarter.