Kinder Morgan Inc (NYSE:KMI) reported a drop of 13.7% to $1.568 billion in revenues in Q2 2020 because of a slump in demand for energy. It has seen a dip in revenues across its business segments like natural gas pipelines (down by 5.13% to $1.016 billion), carbon dioxide (declined by 15.21% to $156 million), products pipelines (down by 26% to $227 million), and terminals (dropped by 21% to $229 million) in Q2 2020.
The producing customers’ shut down wells because of weak prices and thus affected the business of natural gas pipeline earnings. Lower CO2 volumes, oil, and NGL prices caused a dip in carbon dioxide arm’s earnings. The drop in demand for refined products affected the earnings of the pipeline business. Kinder Morgan managed to offset the losses because of the higher use of the liquids storage terminals.
Kinder Morgan declared a per-share dividend of $0.2625, which will be paid on August 17, 2020, for this quarter. It represents an increase of 5% compared to Q2 2019.
Confident of achieving revised guidance
Several states issued stay at home orders to contain the spread of coronavirus and prevent deaths. It caused a dip in demand for energy because several industries are shutdown. Kinder Morgan experienced fluctuations in prices and volumes in Q2 2020. However, it sees a recovery in some of its businesses. Kinder Morgan expects to maintain revised guidance of $7.6 billion for 2020 and declare a promised per share dividend of $1.25.
Richard D. Kinder, EC of Kinder Morgan, said the company generated substantial revenues despite the ongoing coronavirus crisis. He further said economic recovery worldwide is still uncertain, but the company sees optimism about improving its business. The company expects to decide the guidance during a conference in January 2021 because the budget for 2021 will be ready at that time.
Lowers capital spending
Kinder Morgan also revised its capital expenses to $1.74 billion. It helps the company improve the cash flow of $100 million to cover dividends with DCF and capital expenses. All these measures will help the company to maintain a strong balance sheet.
Steve Kean, CEO of Kinder Morgan, said the company protects its employees at this difficult juncture while ensuring essential services on priority to citizens.
Kinder Morgan promoted Products Pipelines arm president – James Holland to COO. Previous CSO, Dax Sanders, will act as President of the product pipeline business.