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Southern Q2 Profit Down 52% On Charge, Mild Weather

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Electric utility Southern Company (SO: Quote) on Wednesday reported a 52 percent decline in profit for the second quarter from last year, reflecting a charge related to Mississippi Power's Kemper County project. The results were also negatively influenced by milder weather. Revenues for the quarter increased, but missed analysts' consensus estimate.

The company's second-quarter earnings were $297 million, or $0.34 per basic share, down from $623 million, or $0.71 per basic share in the year-ago period.

The latest quarter's results include after-tax charges of $278 million or $0.32 per share related to increased cost estimates for the construction of Mississippi Power's Kemper County project. The prior-year period's results include insurance recovery of $21 million or $0.02 per share related to the March 2009 litigation settlement agreement with MC Asset Recovery, LLC.

Excluding items, adjusted net income for the quarter was $575 million, or $0.66 per share, compared to $602 million or $0.69 per share in the prior-year quarter. On average, 14 analysts polled by Thomson Reuters expected the company to report earnings of $0.68 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenues for the quarter increased 2 percent to $4.25 billion from $4.18 billion in the same period last year. Analysts had a consensus revenue estimate for the quarter of $4.30 billion.

Through its subsidiaries, Southern is engaged in the generation, transmission, distribution and sale of electricity in four Southeast states of Alabama, Georgia, Florida, and Mississippi.

Retail fuel revenues increased 2 percent from the year-ago period to $1.26 billion, while retail non-fuel revenues edged down less than 1 percent to $2.36 billion.

Revenues for wholesale increased 9 percent to $454 million, while other electric edged up slightly to $156 million.

Total operating expenses rose 19 percent from the prior-year period to $3.61 billion, with fuel and purchased power expenses increasing 4 percent to $1.50 billion.

In the second quarter, total energy sales to Southern's customers in the Southeast, including wholesale sales and retail, declined 4.6 percent from the year-ago period.

Kilowatt-hour sales to retail customers in the company's four-state service areas declined 2.9 percent from last year. Residential and commercial energy sales decreased 5.3 percent and 4.2 percent, respectively, while industrial energy sales increased 0.6 percent.

In Wednesday's regular session, SO is trading at $45.19, down $0.23 or 0.50 percent on a volume of 2.53 million shares.

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by RTT Staff Writer

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