Utility company Sempra Energy (SRE), on Monday reported a rise in profit for the third quarter, helped by gains from its joint-venture commodities trading business RBS Sempra, notwithstanding a sharp decline in revenues from last year. Earnings came in well ahead of Street estimates, while revenues fell short of expectations.
The San Diego, California-based company's earnings for the third quarter increased to $317 million or $1.27 per share from $308 million or $1.24 per share in the year ago quarter.
On average, 10 analysts polled by Thomson Reuters expected the company to earn $1.19 per share for the quarter. Analysts' estimates typically exclude one-time charges and gains.
In the sequentially preceding quarter, Sempra reported earnings of $198 million or $0.80 per share, down 19% from $244 million or $0.98 per share in the prior-year quarter. Results for 2008 quarter included $33 million in earnings from the retroactive application of SDG&E's rate case, approved in July 2008.
Among subsidiaries, San Diego Gas & Electric's earnings for the recent third quarter dropped to $108 million from last year, while Southern California Gas Co. reported earnings of $74 million, down from the year ago quarter.
At RBS Sempra Commodities, earnings for the quarter were $75 million, compared to a loss of $8 million a year earlier, owing to improved performance in natural gas marketing.
Sempra Generation's earnings for the quarter declined to $43 million from the year earlier quarter, while earnings for Sempra Pipelines & Storage increased to $54 million from last year, mainly due to lower income taxes and increased contributions from the Rockies Express pipeline. Sempra LNG had a break-even third quarter 2009, compared with earnings of $4 million in the prior-year's quarter.
Revenues for the recent third quarter slipped to $1.85 billion from $2.69 billion last year. Street analysts' revenue estimate was $2.16 billion for the quarter.
Segment wise, Sempra Utilities revenues for the quarter dropped significantly to $1.42 billion from $2.01 billion in the corresponding quarter last year, while revenues of Sempra Global and parent decreased to $429 million from $679 million in the same quarter last year.
For the preceding second quarter, Sempra reported revenues that declined 32% to $1.69 billion from $2.50 billion a year ago.
Last week, Royal Bank of Scotland Group Plc (RBS, RBS.L), announced its intention to divest several of its assets, including its 51% stake in the RBS Sempra Commodities joint venture. Sempra said its agreement with RBS requires the bank to maintain its ownership of the joint venture through April 2012.
Donald Felsinger, chairman and chief executive officer, Sempra Energy said, "Our results through the first nine months of the year benefited from the solid performance of our California utilities and our commodities business, as well as continued progress in the build-out of our natural gas infrastructure projects. We remain on track to meet our 2009 financial targets."
For the nine-month period, earnings were $831 million or $3.37 per share, up nearly 5% from $794 million or $3.13 per share in the same period last year. Total revenues for nine months decreased to $5.65 billion from $8.46 billion last year.
Slumping electricity demand and sliding natural gas prices hurt independent power producers, who rely on wholesale electricity prices for their earnings. Utility is one of the areas that the Obama Administration wants to strengthen, with the creation of a Smart Grid, making use of smart meters and load-controllers. President Barack Obama had announced a $3.4 billion federal investment, most of which would go to utilities to install meters, transformers and other equipment that can control the flow of electricity and reduce power use and homeowner bills.
Amongst others in the sector, San Francisco, California-based electricity utility firm PG & E Corp. (PCG), on October 29, reported a year-over-year profit for the third quarter that increased to $318 million or $0.83 per share, compared to $304 million or $0.83 per share, on lower operating expenses, despite a decline in electric and natural gas operating revenues. Quarterly operating revenues declined to $3.24 billion from $3.67 billion last year.
Another peer Rosemead, California-based Power generator and distributor Edison International (EIX ) reported on November 6, an 8.2% year-over-year decline in profit for the third quarter. Core earnings per share for the quarter dropped 25%, yet topped analysts' expectations by five cents. The company's operating revenues for the quarter dropped to $3.66 billion from $4.29 billion in the same quarter last year.
SRE is currently trading at $51.00, up $0.25 or 0.49%, on a volume of 0.20 million shares on the NYSE. In the past 52 weeks, the stock trended in a broad range of $36.43 - $53.75, with a three-month average volume of 1.43 million shares.
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