London: India-focused refiner and power generator Essar Energy’s said a number of key power projects would be delayed, hurting its shares and overshadowing full-year earnings which beat forecasts.
The company, reporting its first full-year results since it listed in 2010, said on Monday it was confident it would nearly triple its power generation capacity in 2011 but said it was pushing back the timetable for three power stations.
“We have moved three projects back a quarter from their original schedule but we are confident we will deliver to these revised dates,” said Essar’s vice-chairman Prashant Ruia on a conference call with reporters, referring to the Salah 1 plant, the Mahan 1 plant and the Vadinar P2 project.
The delays were caused by heavy rains during the monsoon season in India, said the company.
Shares in Essar Energy dipped 5.3% to 450 pence at 1002 GMT, their lowest level since the end of September, and making the company the top faller on London’s bluechip index.
“Some of the projects are delayed so I guess despite the results being better than expected, I think that’s the reason why the stock is down,” said an analyst who did not want to be named.
Essar Energy said earnings before interest, tax, depreciation and amortisation (Ebitda) rose 8% in 2010 to $718.9 million beating a consensus forecast of $684 million from a company-supplied poll of seven analysts.
The company said profits were boosted by higher refining margins, favourable power tariffs and after a full-year of operation at its Algoma power plant in Canada.
Future projects would capitalise on soaring demand for energy in India, said Essar Energy, where petroleum demand is expected to double by 2020 on booming car ownership, and where 44% of homes do not yet have electricity.
Essar Energy, which agreed to buy Royal Dutch Shell’s Stanlow refinery in northwest England for $350 million in February, said it continues to eye acquisitions in coal and oil and gas reserves outside of India.
“We are looking for assets outside India, particularly the natural resources,” said Ruia.
He said the company had submitted a bid for some oil fields being sold by Shell in Nigeria but had found out that it’s offer was not high enough and the company was no longer in the race for the assets.
Essar Energy also said it was waiting for government clearance to allow it to develop coal reserves it owns in India.
“We were eagerly awaiting progress on clearance of coal blocks, but we do not seem to have received any updates on that front,” said analysts at Nomura in a note.
Essar Energy, the majority shareholder in India-listed Essar Oil, is itself 77%-owned by privately-held Indian conglomerate Essar Group.