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Power company AES Corporation says that earnings per share are likely to be down this year, effectively in the lower half of its initial guidance range of between $1.00 to $1.10. Behind this lies the damage it has sustained to vital power infrastructure, the result of hurricanes that have struck the Caribbean and the southern United States.

AES said the storms have shaved between 3 to 5 cents off its EPS. For starters, its power generating units in Puerto Rico were taken offline, although one is now reported to be operational.

The second is still undergoing inspection. A solar plant in the British Virgin Islands was also damaged.

The scenario demonstrates amply to investors how vulnerable the infrastructure of utilities companies are to the growing frequency of severe storms in the region, and how just a few weeks with power generating plants off-line can have an immediate impact on earnings.

The 200 day moving average for AES Corporation shares is 11.37; the 50 day is 11.19. At the time of writing the stock was trading at 11.25.

Shares seemed to be on a medium term recovery path, following the initial news of damage to its power generating capacity.

However, investors should also take note that hurricane season is not over, and there is always next  year.

Power companies will be vulnerable to storms in this region, and may need to invest in making sure their infrastructure is a little more robust in the future.

AES Corporation hands back hydroelectric power plants

In related news, AES Corporation recently handed back two hydroelectric power plants to Kazakhstan. They were part of a concession awarded to the company in 1997. The concession has now expired.

Dealings in Central Asia are always a little murky: such concessions will be renewed based upon what the holder is prepared to pay for them, and whether there are any other bidders in the mix. In the case of eastern Kazakhstan, where the concessions are located, there is considerable interest from Chinese investors, focused on developing their interest in the infrastructure of the Central Asian country.

The decision to vacate the Central Asian concessions may be part of a move to focus on markets closer to home, as well as other forms of alternative energy, like solar and wind.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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