The UK-based independent electricity generator International Power has raised its profit forecasts in spite of a gloomy outlook for power demand. However, the company said that its UK and US businesses remain challenging because of lower demand and weak gas prices.

International Power expects 2009 earnings per share (EPS) to be in line with 2008, reflecting a strong operational performance across its portfolio.

The company said that Europe and Australia are operating ahead of expectations, while US markets remain challenging. The company has completed acquisition of Canadian wind farm developer, AIM PowerGen, in October 2009.

In the UK, First Hydro benefited from higher margins in the short-term market and increased ancillary services revenue as a result of reduced plant availability in the system. Saltend’s operational performance continues and the expected spark spread has improved as a result of capturing lower market gas prices. Rugeley and Deeside continue to perform in line with expectations, International Power said.

Australia has continued to perform well and the expected spread and load factor for Hazelwood remain in line with the company’s expectations.

In the Middle East and Asia, the company’s long-term contracted portfolio continues to operate well.

In October, the power producer completed the acquisition of AIM PowerGen, a Canada-based independent wind farm developer, for a total cash consideration of CAD119m. The portfolio is concentrated in Ontario, with 40MW of wind farms in operation. An additional 40MW is under construction and was financed with a 20-year fixed rate facility, in October 2009. In addition, AIM has an advanced development pipeline of 1,200MW across Canada.

International Power is currently constructing three plants in the Middle East and Europe. At Fujairah F2 in the UAE (2,000MW, 130MIGD), construction is progressing with completion expected in 2010. Both the Elecgas 830MW CCGT project, in Portugal, and the T-Power 420MW CCGT project, in Belgium, are on schedule to reach commercial operation in 2011.

The Middle East, Northern and Southern Africa and Asia continue to offer short and medium-term growth opportunities. The company evaluates new projects across these markets for potential developments in Morocco, Saudi Arabia, Oman, Indonesia, Thailand and Vietnam.

In October, the sale of Hartwell, a 318MW gas and oil-fired peaking facility located in Georgia, was completed generating cash proceeds to International Power of some $50m. In the same month, the AUD425m SEA Gas project refinancing was completed. This new financing will run until October 2012 and fully replaces the existing financing, which was due to expire in December 2009.

The Hazelwood refinancing of AUD445m is due by February 2010. The company is reviewing refinancing options, whilst closely monitoring developments on the proposed CPRS.

The US combined cycle gas turbine fleet refinancing of $769m is due by July 2010. A number of refinancing options are under consideration, including the temporary pay down of this debt.

For 2009, the expected effective tax rate is estimated at 24%, although there is potential for this to decrease if International Power resolves historic tax issues across the group.

Group profitability has benefited from a weakening of sterling against the euro, the Australian dollar and the Czech koruna.

Philip Cox, CEO of International Power, said: “We continue to benefit from strong operational performance and our diversified international portfolio. We now expect 2009 EPS to be broadly in line with 2008, and free cash flow to be significantly ahead of last year.”

International Power has published its interim management statement, in respect of the period from 1 July 2009 to 10 November 2009.