AEP released its second-quarter earnings report this morning. I scanned through it to see that AEP reported earnings of $3 million in its river transportation business in the quarter and $6 million in the first two quarters of the year. Those compare favorably with losses of $9 million in the second quarter of last year and $11 million in the first half.
Company executives had a conference call with investment analysts earlier today. I have not yet listened to a replay. If they said anything about river operations, I'll update this.
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While we're talking corporate finance, you might want to check out this Bloomberg.com article "Coal Company Pain Accelerates as Bankruptcy Cases Rise".
I dug a little more into the AEP earnings report to pull out information on the River Operations unit. If you do the math, AEP in the first half of this year had $5.8 million in net income on $325.3 million of revenue. That's about 1.8 percent profit (although you never hear an executive use the word "profit"; it's usually "net income" or "earnings"). The beer or cigarettes you buy at a convenience store returns about 20 to 25 percent profit to the store owner, by comparison.
To put it another way, on a 15-barge tow, about a quarter of one barge is profit. The rest goes to expenses and other costs.
Here are the numbers, for those who are interested:
| AEP River Operations | ||
| (All numbers in millions) | ||
| First six months | 2014 | 2013 |
| Total revenues | 325.3 | 249.6 |
| Expenses | 309.1 | 259.7 |
| Maintenance and operations | 286.6 | 239.3 |
| Depreciation and amortization | 15.3 | 15.3 |
| Taxes other than income taxes | 7.2 | 5.1 |
| Operating income | 16.2 | -10.1 |
| Income before taxes and equity earnings | 8.6 | -18.5 |
| Interest income | 0 | 0.1 |
| Equity investments | -7.6 | -8.5 |
| Income taxes | 3.4 | -7.1 |
| Equity earnings | 0.6 | 0.6 |
| Net income | 5.8 | -10.8 |
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