Profits at Belco Holdings Ltd. have dropped by over 20 percent or $1.7 million to $6.6 million for the first six months of 2003.

Last year the company's bottom line was inflated by the sale of its subsidiary Fibre.com Ltd. for $1.2 million,

“We are pleased with this result, as overall earnings for the first six months of 2003 have exceeded projections.

“We anticipate the year-end results will be similar to 2002, excluding the gain on sale of investments,” said Garry Madeiros, president and chief executive officer.

On Friday, the company, which provides electricity to the Island, announced consolidated net earnings for the first six months of the 2003 financial year of $6,641,376, compared to $8,318,216 for the same period in 2002.

Electric energy revenue, which represents the primary contributor to the company's bottom line, increased by 14.21 percent compared with the previous year, mainly as a result of an increase in fuel adjustment revenue, said Belco in its six monthly report.

Fuel prices were up 26.88 percent, as the average price per barrel of fuel used was $53.19 compared to $41.92 in 2002. The increase in fuel adjustment revenue was offset by an identical increase in fuel cost, added the Belco statement. Revenue from sales, net of fuel adjustment revenue, was up 5.46 percent over 2002.

Kilowatt hour sales were slightly ahead of expectations, up 5.53 percent over 2002, representing increases in all categories, said the company's release.

“This is attributed to both cooler winter weather, producing increased demand for heating, and warmer spring and early summer temperatures, driving up air conditioner usage,” said the release.

Other results showed net earnings from Bermuda Gas & Utility 17.3 percent ahead of the first six months of 2002 increasing from $439,000 to $515,000 in 2003.

Year-to-date gas sales are ahead of last year resulting in the profit from gas sales being 3 percent higher. Appliance sales were 7.5 percent ahead of the first six months of 2002, as Bermuda Gas continued to expand product lines. Revenues from service and the sale of parts increased 10.4 percent.

Gross profits from Belco Energy Services Company (BESCO) increased 73 percent to $355,531 and operating expenses increased 12 percent, in line with expectations.

“As has been the norm for this business, during the first six months of the year, efforts focus on initiating and setting up project schedules resulting in increased expenditure which is offset by income from these projects during the third and fourth quarters,” said the release. “A significant portion of this work is for related companies. Profits associated with these inter-company transactions have been eliminated in these financial statements.”

Belco Holdings' share price increased 8.8 percent from $31.25 at June 30, 2002 to $34.00 at June 30, 2003. “This capital appreciation in our share price results in a dividend yield of 4.53 percent,” added the company.

“The first six months of 2003 achieved good results, as overall energy sales increased and the subsidiary companies moved forward on a number of initiatives to enhance productivity and performance,” Mr. Madeiros said.

“The winter peak load on our electricity system increased 3.15 percent from 101.5 megawatts to 104.7 megawatts during the first six months of the year, compared with the previous year. On August 6, 2003 the summer peak load reached a record high of 114.6 megawatts.”

In the first half of the year, Belco sought planning approval and continued contract negotiations for the extension of the East Power Station building to include two new generators, the company said.

This will add 29 megawatts of plant capacity to meet the Island's growing demand for electricity. Belco said it expects to finalise the contract by the end of November 2003 with commissioning in time for summer 2005. The new engines will be installed adjacent to the two that were added to the plant in 2000 and will share the existing stack.