Scottish Power Plc, parent company of PacifiCorp, said fiscal second-quarter profit fell 30 percent because of an accounting change, and it expects customer growth to slow in the second half.
Net income fell to 122 million pounds ($213 million), or 6.59 pence a share, in the three months ended Sept. 30 from 173.7 million pounds, or 9.18 pence, a year earlier, the Glasgow, Scotland-based company said Thursday in a Regulatory News Service statement.
Scottish Power, the utility E.ON AG wants to buy, added 23,000 customers in the quarter, down from 50,000 in the first, Bloomberg calculations show, and now has 5.2 million clients. Customer growth will probably slow further in the second half, the company said in the statement.
Scottish Power Chief Executive Ian Russell and E.ON, which said Sept. 5 it was considering buying Scottish Power, both declined to comment Thursday about a possible takeover.
"Scottish Power's first-half results are slightly lower than our expectations," Fraser McLaren, an analyst with ING Groep NV in Edinburgh, said in a note to investors. "The statement warns that the pace of profit growth in the second half will be lower, mainly due to the timing of acquisitions and fewer new customers."
The company's shares fell half a penny to 577.5 pence in London, valuing the company at 10.8 billion pounds.
The stock has gained 10 percent since E.ON, Europe's largest power company, said in September it was interested in buying the company, the U.K.'s fifth-largest energy provider. Dusseldorf-based E.ON then said Scottish Power's share price already reflected speculation the company could be taken over.
"We continue to believe that there is downside risk in Scottish Power, with a significant gap between our base case valuation and the current share price, which a bidder may find hard to justify," McLaren said.
Scottish Power shares have also gained 31 percent since the company agreed to sell U.S. unit PacifiCorp, the parent company of Utah Power, to a utility controlled by U.S. billionaire investor Warren Buffett for $5.1 billion in cash on May 24. The sale raised speculation that more focus on the U.K. market would make the company a takeover target.
E.ON, RWE AG and Electricite de France are expanding in Britain, where power prices have soared by 47 percent over the past 12 months, reflecting the higher cost of fuel. Power and gas prices are likely to remain high over the next 12 months, then may "gradually come down," Russell said during a conference call.
Second-quarter pretax profit from continuing business rose to 126 million pounds from 84 million pounds, the company said. The accounting change reduced net income as profit now includes costs linked to contracts used to guard against swings in commodity prices and interest rates.