Constellation Energy swings to $225.7M 3Q loss

NEW YORK - Constellation Energy Group Inc., which is being bought by MidAmerican Energy Holdings Co. for about $4.7 billion, said Thursday it swung to a third-quarter loss because of volatile commodity prices and a frozen credit market.

For the period ended Sept. 30, the nation's largest power wholesaler posted a net loss of $225.7 million, or $1.27 per share, compared with net income of $251.4 million, or $1.38 per share, in the year-ago period.

Excluding one-time items such as mark-to-market gains, the company reported earnings of 76 cents per share.

Revenue fell 9 percent to $5.32 billion, from $5.86 billion.

Analysts polled by Thomson Reuters expected, on average, earnings of 88 cents per share on revenue of $5.11 billion. Analysts typically exclude one-time items.

Company shares fell 30 cents to $23.25.

Constellation recorded a $314.1 million impairment charge to write-down the value of some of its units, including its Merchant energy business.

"We are taking active steps to adjust to a new business environment marked by declining prices, illiquid markets and scarce credit," Mayo A. Shattuck III, Constellation's chairman, president and chief executive officer, said in a statement.

The company has put its upstream gas, coal and freight businesses on the block, and on Thursday said it would sell its Houston-based gas trading operations, in a move to boost its liquidity.

"Since the merger announcement, we have emphasized the need to reduce earnings at risk and decrease our exposure to incremental collateral posting," Shattuck said. "We have substantially reduced our economic exposure to directional commodity price risk by reducing position size and overall length of our portfolio. These activities have affected our third quarter results."

Shattuck added that those forces will also be at play during the final quarter of the year.

Constellation's expenses rose to $5.55 billion from $5.43 billion.

MidAmerican, a unit of Warren Buffett's Omaha, Neb.-based Berkshire Hathaway, said in September it would buy Constellation in a cash-and-stock deal worth about $26.50 per share. The company plans to infuse Constellation with $350 million, on top of the $1 billion already promised.

Shattuck said in a conference call with investors Thursday morning that he hopes to close the deal by the second quarter of 2009.

Shares of Constellation fell 30 cents, or 1.3 percent, to $23.25 in Thursday trading. The stock has traded between $13 and $107.97 in the past 52 weeks.

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