Boston, MA 05/08/2014 (wallstreetpr) – Plains All American Pipeline, L.P. (NYSE:PAA) joined other oil and gas companies that are witnessing leveling or declining bottom-line even in the face of the U.S. drilling boom. Though the company receives fees from many of its activities and is less impacted by price volatility, demand for its services was tepid in the latest quarter, therefore, impacting performance.
However, the management believes that 1Q is likely to be an isolated case for the company as the balance of 2014 is projected positively.
In addition to attracting more business contracts and improving storage and pipeline capacities, the company can also be seen adjusting costs and expenses to offer support to the bottom-line. The management has also promised to give greater attention to segments that showed weakness in the latest quarter with the aim of improving them.
1Q in summary
Plains All American Pipeline, L.P. (NYSE:PAA) reported 27 percent decline in 1Q2014 profit. The company realized $384 million in profit in the latest quarter, down from a profit of $528 million in the corresponding quarter a year earlier. The latest quarter yielded earnings of 73 cents per share, down from $1.27 per share a year ago. The quarter witnessed adjusted earnings of 65 cents per share. The adjusted earnings a year earlier were $1.26 per share.
Though bottom-line suffered in 1Q, top-line held up nicely, gaining 10 percent year-over-year to $11.7 billion. Also, while EPS matched Wall Street expectation for the quarter, revenue came strongly above expectations at $11.22 billion.
Segment weakness
The transportation and facilities segment played a significant role in supporting 1Q earnings. The segment was up 22 percent in the quarter. However, heartbreaking drops were witnessed in the logistics segment where adjusted earnings nosedived 52 percent due mostly to the lackluster crude oil market conditions.
According to CEO Greg L. Armstrong, Plains All American Pipeline, L.P. (NYSE:PAA) is poised to perform positively in the balance of fiscal 2014, citing that some of the negative impacts witnessed in 1Q arose from unfavorable winter weather conditions that are no longer a headache.
