Boston, MA 04/30/2014 (wallstreetpr) – The pipeline and storage operator NuStar Energy L.P. (NYSE:NS) reported profit increase in the most recent quarter. The earnings were also in-line with Wall Street estimate although better than a year earlier quarter. Despite profiting, concerns remain about the company’s future performance especially considering how the profits were obtained.
If it were not for the more cuts on expenses, perhaps the quarter could have missed Wall Street estimates. The earnings in Q12014 were supported by big drops in expenses. For example, administration cost declined by more than 24 percent while other expenses were down 6.6 percent in the quarter.
While decline in expenses suggests internal improvements in the company thus leading to higher earnings, slow growth in revenue remains an issue that the company should address if a positive future is to be secured.
Relying on expenses reduction to offset revenue decline might not help in the long-run given that there are always limits in expenses reduction. And even so, growth in earnings might be difficult to attain if greater attention is given to expenses reduction than revenue growth.
NuStar Energy L.P. (NYSE:NS) reported revenue of $849.21 million in the latest quarter. That compared unfavorably with revenue of $998.19 million a year earlier.
Q12014 earnings in summary
The company provides storage and transportation solutions on a wide range of petroleum products. Its Q12014 revenue was somehow impacted by the harsh winter weather, but earnings held on well thanks to lower expenses. The company reported a profit of $39.6 million, translating to 36 cents per unit. That compared favorably with $24.4 million or 17 cents per unit in the same period a year ago. Analysts polled by Thomson Reuters expected the company to earn 36 cents per unit, of which the company met.
Asset divestment
Consolidation seems to be taking center-stage at NuStar Energy L.P. (NYSE:NS). The company continues to divest non-core assets as it seeks to gain more focus on more profitable operations especially the fee-based storage and pipeline business.
