Allete profits up in 2016
Allete Inc. posted a profit of $155.3 million in 2016, a 10 percent increase from the year before despite a drop in revenue.
The Duluth-based company and parent of Minnesota Power had $1.34 billion in operating revenue last year, compared to $1.49 billion in 2015.
The 2016 earnings represent $3.14 per share and beat analysts' estimates, according to Zacks Investment Services.
Company officials sounded a positive note on the results with an eye to growth this year.
"I am pleased with the company's position and outlook as we move into 2017," Allete CEO Al Hodnik said in a statement. "Minnesota Power's industrial customers start the year on a strong note, and our energy infrastructure and related services businesses are well positioned to capitalize on renewed growth and investment initiatives."
During an investor call Tuesday, Hodnik said he expects all of its taconite customers to be in operation this year, which could help reverse declining industrial power sales.
Industrial customers represent about half of Minnesota Power's business, according to Securities and Exchange Commission filings, while residential and commercial customers comprise just 18 percent.
Hodnik again raised the possibility of supplying power to the proposed PolyMet mine and Mesabi Metallics, formerly Essar Steel, as a way to boost revenue.
"Our view remains not if but when," Hodnik said of the half-completed Mesabi Metallics taconite mine.
Company officials lauded subsidiaries U.S. Water and Allete Clean Energy during Tuesday's call, saying the two are poised to "provide long-term earnings growth," vice president and chief risk officer Bob Adams said.
Adams will take over as chief financial officer after Steven DeVinck retires next month.
Hodnik said twice during the call that Minnesota Power's ideal power mix is two-thirds renewable, including "renewable-enabling natural gas," and one-third coal.
To that end, the Great Northern Transmission Line the company is spending $330 million on will connect the utility to Manitoba hydro power after 2020; two small coal-fired Boswell Energy Center units are to be retired next year.
Currently more than half of all the power Allete's utilities buy is from coal-fired power plants.
Allete's stock price approached a one-year high on Tuesday, closing up at $65.69. It has traded as high as $66.92 and as low as $50.83 in the past 52 weeks.