TransCanada Corp. (NYSE: TRP) reported a better-than-expected quarterly profit on April 29, helped by higher income from its Ontario nuclear energy company Bruce Power and a lower-than-expected effective tax rate.
Earnings from Bruce Power, which TransCanada owns a 48.5% stake, jumped more than 44% in the first quarter due to higher profits from power contracts.
The company reported lower earnings on its liquids pipelines, however, in part because of lower uncontracted volumes on its Keystone crude pipeline to the U.S. and Marketlink line from Cushing, Okla., to the Gulf Coast.
Many of TransCanada's customers have been hammered by benchmark U.S. crude prices slumping to 13-year lows of around $26 a barrel in the first quarter.
"Our industry is facing unprecedented headwinds. That has had a significant impact on our customers, who are under significant pressure to reduce costs in order to remain profitable," said chief executive Russ Girling, speaking at TransCanada's annual general meeting in Calgary.
"We recognize that going forward, our customers need us to be as cost competitive as we can be."
U.S. crude was last down 10 cents on the day at $45.93 a barrel.
TransCanada, the company behind the controversial Keystone XL pipeline that was rejected by President Barack Obama last year, is pressing ahead with its Energy East project from Alberta's oil sands to Canada's Atlantic coast.
That pipeline is also facing environmental opposition and regulatory headwinds, but earlier this month the province of Quebec agreed to suspend litigation against TransCanada in return for the company undergoing an additional environmental assessment.
On the gas side, TransCanada said last month it would buy Columbia Pipeline Group Inc. (NYSE: CPGX) for $10.2 billion, creating one of North America's largest natural gas transmission businesses.
RELATED: Moving On: TransCanada Buys Columbia Pipeline In $13 Billion Merger
Net income attributable to TransCanada shareholders fell 35% to C$252 million (US$201 million), or 36 Canadian cents per share.
The company's profit was hit by a C$176 million after-tax charge related to its decision to scrap agreements to buy power from coal-fired plants in Alberta.
Excluding one-time items, the company earned C$494 million, or 70 Canadian cents per share, in the quarter ended March 31.
Analysts on average had estimated a profit of 66 Canadian cents a share, according to Thomson Reuters.
TransCanada shares were last up 0.5% on the Toronto Stock Exchange at C$52.25. (US$1 = 1.2523 Canadian dollars)
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