FARMINGTON HILLS, Mich., Oct. 26 /PRNewswire/ -- SEMCO ENERGY, Inc.
(NYSE: SEN) President and Chief Executive Officer Marcus Jackson today
announced a redirection of the Company's business strategy.
"Since my arrival in June, I've conducted a thorough assessment of the
current corporate strategy, the financial performance of the business
segments, the performance of the regulated and unregulated businesses and a
review of the organizational structure and business processes. Our priority
now is to maximize the profitability of existing units. The Board of
Directors, management team and I believe we then will be on a course to
capture the benefits of internal growth. Restructuring corporate, business
unit, and operational architectures to eliminate redundant functions and
personnel will lend itself to efficient business strategy execution.
Together, this will position us to realize more of the Company's potential to
achieve attractive earnings per share gains and provide a competitive total
return to shareholders," he said.
SEMCO will focus on maximizing the value of certain of its existing
businesses by concentrating more on profitable growth within these lines of
business and less on acquisitions. The redirected strategy will involve the
divestiture of certain engineering and construction businesses that are not
likely to contribute to additional shareholder value in the near term. The
reduction of administrative costs and acceleration of the integration of the
remaining construction businesses should further improve profitability. SEMCO
also will restructure corporate staff operations and re-deploy those staff
resources to increase business effectiveness.
As part of leadership succession, William L. Johnson will retire as
Chairman of the Board on February 28, 2002. Marcus Jackson, President and
Chief Executive Officer will succeed Johnson as Chairman. The SEMCO ENERGY
Board of Directors is currently recruiting a new board member to fill the
opening on the Board created by Mr. Johnson's retirement.
In its Gas Distribution business, SEMCO has assigned Jon A. Kosht, current
President of SEMCO ENERGY GAS COMPANY, the corporation's Michigan gas utility
division, responsibility for the administration and operation of ENSTAR
NATURAL GAS COMPANY as well. ENSTAR distributes natural gas to customers in
Anchorage, Alaska. Under his leadership, he and ENSTAR President, Tony Izzo,
will continue the integration and operation of ENSTAR. Focused efforts now
are underway in Michigan to extend for an additional three years a Frozen Gas
Rate and Customer Choice Program beyond the sunset date of March 31, 2002 and
to satisfactorily resolve a pending rate case in Alaska.
In the Engineering and Construction business segment, currently operating
under the brand name NATCOMM, SEMCO will divest itself of the engineering
services sector. This part of the business is not expected to grow or make a
significant near-term contribution to earnings. SEMCO intends to close its
NATCOMM Houston office and consolidate administrative functions in Michigan.
The Construction services business is organized into geographic divisions in
the Midwest and South. Any under-performing regions that are not likely to
improve profitability in the near future will be eliminated. NATCOMM's
current president, Robert A. Stone, who had previously announced his intention
to retire, will leave in February 2002. The Company has instituted a search
for a new NATCOMM president.
NATCOMM's new business strategy will focus on profitable internal growth
through expansion of its geographic reach and customer base. Any future
capital investments likely will be modest and will supplement internal growth
and profitability. Average annual growth in the Construction segment is
estimated to be approximately 5 to 7 percent in the next five years from a
current operating revenue base of $115 million.
In SEMCO ENERGY's third business segment, Aretech Information Services,
the focus will be on supporting existing businesses. Building on its early
successes, Aretech's enduring commitment and focus will be on profitable sales
to companies desirous of outsourcing their mid-range computer operations.
Any future capital investments in this business likely will be modest and
supplement internal growth and profitability. Estimated annual operating
revenue growth should be in the 10-20 percent range from a current base of
approximately $10 million.
In the Propane, Pipelines and Storage segment, SEMCO will continue to
pursue business opportunities in areas related to natural gas storage and
transmission business which leverage its current assets and management
expertise. The propane business will continue to be evaluated for profit-
enhancing initiatives and long-term strategic fit.
As a result of its redirected strategy and restructuring, SEMCO ENERGY
anticipates taking a one-time after tax charge to earnings in the 4th Quarter,
of up to $11 million and expects to reduce annual costs by an estimated $1.8
million after tax beginning in 2002. The Company now expects 2001 earnings
per share of $.47 to $.53 exclusive of the one time charge and assuming normal
weather for the fourth quarter. The Company expects that, under normal
weather conditions, 2002 earnings per share will be $.87 to $.95.
"We've got a solid business foundation," said Jackson. "We have strong
leadership and technical expertise, especially so in our core gas distribution
business. I intend to deliver shareholder value by redirecting and
simplifying the business strategy. By right-sizing the organization and
making economic value-added decisions we will strengthen our company's
financial stability and be better positioned for growth," Jackson concluded.
SEMCO ENERGY, Inc. is a diversified energy and infrastructure company that
distributes natural gas to more than 369,000 Customers in Michigan and Alaska.
It also owns and operates businesses involved in natural gas engineering and
quality assurance services, pipeline construction services, propane
distribution, intrastate pipelines and natural gas storage in various regions
of the United States. In addition, it provides information technology and
outsourcing services, specializing in the mid-range computer market.
The following is a "Safe-Harbor" statement under the Private Securities
Litigation Reform Act of 1995. This release contains forward-looking
statements that involve risks and uncertainties. Statements that are not
historic facts, including statements about the Company's outlook, beliefs,
plans, goals and expectations, are forward-looking statements. Factors that
may impact forward-looking statement include, but are not limited to, the
effects of weather, the economic climate, competition, commodity prices,
changing conditions in the capital markets, regulatory approval processes,
success in obtaining new business and other risks detailed from time to time
in the company's Securities and Exchange Commission filings.
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SOURCE SEMCO ENERGY, Inc.
Web site: http: //www.semcoenergy.com
CONTACT: Analysts Contact: Thomas Connelly, Director of Investor Relations, +1-248-702-6000, ext. 6240, or Media Contact: Francis R. Lieder, Manager of Media Relations, +1-810-987-2200, ext. 4186, email: firstname.lastname@example.org , both of SEMCO ENERGY, Inc.