A day after being promoted into the FTSE-100, International Power reported an 8.8 per cent fall in annual earnings, but said there were signs of improving market conditions.
The electricity utility, which runs a coal-fired plant at Rugeley, Staffordshire, also revealed its 2004 dividend would be 2.5 pence - its first since its creation in October 2000 from the demerger of Britain's National Power.
Profit before interest and tax was £287 million in 2004, up £2 million on the year before. Turnover was at £ 768 million, down from £852 million in 2003.
International Power said the significant increase in forward power prices in 2004 would benefit Rugeley this year and the plant is now highly contracted for 2005. It has entered into a longer-term contract with Centrica to supply 250 MW of peak power for a three-year period commencing October 2005.
The amount of compensation to be received by Rugeley, following the termination of a tolling agreement with TXU Europe, has been agreed with TXU Europe's administrators at between £73 million and £84 million, it said.
There were some signs of better market conditions in the United States, it said, and added it expected an earnings recovery in 2005.
International Power has been dogged by losses in North America, where overcapacity has led to lower prices and profit margins.
The company reiterated it expected recovery in the US to take place between 2007 and 2009.
It said there were signs of a modest improvement in North America, where it operates in Texas and New England, as companies were starting to mothball inefficient plants.
It boosted its portfolio in July by acquiring plants worth $2.3 billion (£1.19 billion) from US firm Edison Mission Energy in a joint venture with Tokyo-based Mitsui. Its promotion into the FTSE came at the expense of Cairn Energy.
Shares in International Power closed last night up 0.75p to 179.25p