PPL Expects U.K. Referendum Not To Impact Its Operations Significantly

PPL Corporation PPL revealed Friday that the results of the referendum on Britain exiting the European Union would not impact its operations significantly in the region. According to the company, its management would continue to monitor developments closely.

PPL Chairman, President, and CEO, William Spence, commented, "The extent and duration of any potential decline in the value of the British pound sterling to the U.S. dollar is unknown at this time. A long-term reduction in the value of the pound as a result of the U.K. referendum could require us to reassess our earnings growth rate."

He continued, "We have implemented an effective hedging program that substantially protects us against fluctuations in foreign currency exchange rates through 2017. In addition, any negative exposure to long-term changes in foreign currency exchange rates could be partially offset by other factors, including increases to U.K. inflation and interest rates that may occur as a result of actions taken in response to the referendum vote."

However, the company reaffirmed its 2016 reported earnings guidance of $2.29 - $2.49 per share and earnings from ongoing operations forecast of $2.25 - $2.45 per share. Street expects $2.35 a share for the same period.

Moreover, PPL indicated it was not modifying its previously announced projection of 5-6 percent compound annual earnings growth through 2018. The company added that this expected growth reflected projected earnings compared to 2014 earnings from ongoing operations or adjusted of $2.03 per share.

As far as hedging of the currency, PPL is 93 percent hedged for the balance of the current year budgeted earnings at an average rate of $1.54 per pound, and 89 percent hedged for 2017 at a rate of $1.58 per pound.

In the pre-market trading on Friday, the stock traded 4.16 percent down.