International Power bullish as profits slide

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The Independent Online

International Power, the electricity generator, plans further investment in its core markets despite announcing a disappointing set of half-year figures yesterday.

The chief executive, David Crane, said that the company was "aggressively looking at making acquisitions" using the company's sound financial position to take advantage of a depressed market. Last week the company announced that it had won the battle to enter into exclusive negotiations to take a key stake in Drax, Europe's largest coal-fired power station, in Selby, North Yorkshire. Mr Crane would not be drawn on any acquisitions timetable at this stage but confirmed that the company was "focused on enhancing the portfolios in our core regions".

Mr Crane's bullishness comes despite continuing difficult trading conditions in the North American and UK markets. The company's North American operations have been affected by weak pricing conditions which are unlikely to improve without the withdrawal of some existing capacity.

The company had also failed to see the full value of recent rises in UK power prices, because a significant portion of its UK generation capacity is contracted to March 2004 at prices set before the price improvement.

Despite encouraging results from segments outside North America and the UK, group pre-tax profit excluding exceptional items was down almost 46 per cent from £162m to £88m.

IP shares closed 9p lower at 137.25p after publication of the results, but analysts remained confident that the company was well placed to benefit from the long-term trend for higher wholesale electricity prices in both the US and UK.

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