Electricity generator and distributor Southern Company (SO) Wednesday reported an increase in fourth quarter profit, helped by lower non-fuel operations and maintenance costs, increased monthly service charges and revenues related to recovery of investments in environmental equipment. Earnings for the quarter came in ahead of Street view by a penny, while revenues fell short of estimates.
For the fourth quarter, the Atlanta, Georgia-based company reported earnings after dividends on preferred and preference stock of $251 million, an increase from $186 million in the same period a year ago. On a per share basis, earnings increased to $0.31 from $0.24 in the previous year. Excluding items, net earnings were $251 million or $0.31 per share versus $202 million or $0.26 per share last year.
On average, 15 analysts polled by Thomson Reuters expected Southern to earn $0.30 per share for the quarter. Analysts' estimates typically exclude special items.
Net income for the period increased to $267 million from $202 million in the prior-year period. The company noted that recession had a significant impact on overall electricity sales and usage in 2009, with industrial sales showing the largest decline with a decrease of 11.8% year-over-year. Southern added that industrial activity in Southeast stabilized and began showing signs of improvement in the third quarter.
Total revenues for the quarter were $3.51 billion as compared with $3.80 billion in the fourth quarter of prior year. Analysts expected Southern to generate revenues of $4.24 billion for the quarter.
Retail revenue from fuel declined to $1.19 billion from $1.41 billion in the previous year, and wholesale revenues were $394 million compared with $520 million in the same quarter last year. Non-regulated operating revenues slipped to $23 million from $30 million in the prior year. Non-fuel revenues rose to $1.76 billion from $1.72 billion in the year-earlier quarter, and other electric revenues were $141 million versus $131 million in the comparable period prior year.
In the fourth quarter, total sales dropped to 42.92 billion kilowatt-hours, or KWHs, from 44.76 billion KWHs in the previous year. Total retail sales were 35.79 billion KWHs versus 36.00 billion KWHs in the same quarter last year, and total wholesale sales were 7.13 billion KWHs compared to 8.76 billion KWHs a year earlier.
Kilowatt-hour sales to retail customers in Southern's four-state service area fell 4.8% in 2009, residential energy sales decreased 1.1%, commercial energy sales slipped 1.7%, and industrial energy sales declined 11.8% from the previous-year quarter.
During the three-month period, total operating expenses declined to $3.03 billion from $3.33 billion in the 2008-year period, owing to lower expenses for fuel and purchased power and non-fuel O & M. Depreciation and amortization costs for the quarter rose to $409 million from $373 million in the year-earlier period.
In the preceding third quarter, the company reported earnings after dividends on preferred and preference stock of $790.0 million, up from $780 million in the same period a year ago. On a basic per share basis, earnings dropped to $0.99 from $1.01. Net Income for the quarter was $807 million versus $797 million in the previous year. Third quarter revenues declined to $4.68 billion from $5.4 billion a year earlier.
For the full year 2009, Southern's earnings after dividends on preferred and preference stock fell to $1.65 billion or $2.07 per share from $1.74 billion or $2.26 per share in the previous year. The company's net earnings slumped to $1.71 billion from $1.81 billion in the year-earlier period. Excluding items, net earnings were $1.85 billion or $2.32 per share as against $1.83 billion or $2.37 per share in fiscal 2008.
Southern noted that earnings for the year included a charge of 25 cents a share with regard to a settlement deal with MC Asset Recovery LLC, in order to resolve a lawsuit arising out of 2003 bankruptcy of Mirant Corp., a Southern subsidiary until its 2001 spin-off. Full year revenues were $15.74 billion as compared to $17.13 billion in the comparable period prior year. Analysts expected the company to earn $2.31 per share on revenues of $16.63 billion for the year.
Among peers, electric utility company FPL Group, Inc. (FPL), on January 26 reported a decline in fourth quarter profit, primarily reflecting challenges at its subsidiary NextEra Energy Resources. The Juno Beach, Florida-based company's net income for the quarter declined to $349 million or $0.85 per share from $408 million or $1.01 per share in the previous year, and revenues were $3.66 billion, down from $4 billion in the prior year quarter.
SO is currently trading on the New York Stock Exchange at $33.02 per share, up $0.05 or 0.14%, on a volume of 1.53 million shares. In the past 52-week period, the shares have been trading in a range of $26.48 to $35.30.
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