Since it was demerged from National Power, International Power shares have underperformed the sector by over 50 per cent. This has been bad news for investors, with the company declining to pay a dividend and relying on share price rises to reward shareholders. David Crane, CEO of International Power, announced that the company would be “initiating a share repurchase programme”. The scale of the buy-back, which had been anticipated, was not revealed.
Standard & Poors reaffirmed its BB rating for the company, and said: “The announcement of a share buy-back is contrary to International Power’s strategy so far, but given the available cash of more than £600 million at the end of the first quarter of 2003, and given the expectations for the rest of the year, a limited share buy-back is not considered detrimental.” The company announced that pre-tax profits for the first quarter had fallen from £76 million to £48 million. It blamed extreme weather conditions, which led to frozen gas pipelines, for a £5 million operating loss in the USA. The company has also suffered from the decline in British wholesale electricity prices. The company’s operations in continental Europe and the Middle East had, however, performed well. Turnover in the first quarter rose from £270 million to £331 million.