Electric utility Southern Co. (SO) on Wednesday reported a higher profit for the third quarter, helped by lower expenses and an increase in monthly service charges. However, earnings on a per share basis decreased from last year owing to more number of shares in the latest period. Looking ahead, the company said it sees signs of stabilization in the economy.
The Atlanta, Georgia-based company reported third quarter earnings after dividends on preferred and preference stock of $790.0 million, higher than $780 million in the same period a year ago. On a basic per share basis, earnings dropped to $0.99 on 798 million shares, from $1.01 on 773 million shares.
On average, 11 analysts polled by Thomson Reuters expected the company to report earnings of $0.99 per share. Analysts' estimates typically exclude special items.
Net Income for the quarter increased to $807 million from $797 million in the previous year.
The company noted that cooler than average weather and the weak economy continued to have a negative impact on third-quarter earnings, leading to a decrease in electricity usage and sales, and flat customer growth. However, earnings for the quarter benefited from lower operations and maintenance expenses, increased monthly service charges, revenues associated with the recovery of investments in environmental equipment, and the amortization of excess funds set aside for the removal of retired equipment.
Total Revenues for the quarter declined to $4.68 billion from $5.4 billion in the same period a year ago. Analysts estimated revenues of $5.5 billion for the quarter.
Retail revenue from fuel declined to $1.539 billion from $1.911 billion in the prior year, while non-fuel revenues dropped to $2.458 billion from $2.568 billion. Wholesale Revenues slipped to $519 million from $775 million.
In the third quarter, kilowatt-hour sales dropped 6.1% from last year. Kilowatt-hour sales to retail customers in Southern Company's four-state service area decreased 5.1% from last year and Residential electricity sales dropped 2.6%. Electricity sales to commercial customers decreased 3.6%, and industrial sales decreased 9.6%.
Operating revenues at Alabama Power dropped 14.6% to $1.592 billion and pre-tax earnings edged up 1.9% to $425 million. In Georgia Power, operating revenues dropped 12% to $2.33 billion and pre-tax earnings slipped 5.6% to $608 million. Mississippi Power generated operating revenues of $331 million, down 13.3% from last year, and pre-tax earnings dropped 2.5% to $57 million.
Gulf Power reported operating revenues of $378 million, down 10.5% from last year. The segment's pre-tax earnings grew 4.9% to $65 million. In Southern Power, operating revenues declined 45.1% to $283 million. However, pre-tax earnings grew 11.7% to $108 million.
Total operating expenses declined to $3.27 billion from $4.02 billion, owing to significantly lower expenses for Fuel and Purchased Power.
In July, the company reported a 14% rise in second-quarter profit, reflecting lower operating expenses and the absence of charges recorded in the prior year, despite a drop in revenues. Net income available to common shareholders were $478.6 million or $0.61 per basic share, higher than last year's $416.4 million or $0.54 per basic share. Revenues for the quarter fell 7.8% to $3.89 billion from $4.21 billion in the year-ago quarter.
For the nine months of the fiscal, earnings after dividends on preferred and preference stock declined to $1.39 billion or $1.77 per share from $1.56 billion or $2.02 per share in the prior year. Net revenues declined to $12.23 billion from $13.32 billion in the previous year.
Commenting on the third-quarter results, Southern Company's Chief Executive Officer David Ratcliffe said, "While the economy continues to take its toll, we are seeing signs of stabilization and what may be the beginnings of recovery in certain sectors in our region. We realized an 11 percent increase in industrial sales over the second quarter of 2009."
Utility is one of the areas that the Obama Administration wants to strengthen. The government wants to create a smart grid making use of smart meters and load-controllers. President Barack Obama on Tuesday announced a $3.4 billion federal investment in the creation of a "smart grid" for the nation's electricity. While creating new pathways for energy, investments in the smart grid would also create thousands of new jobs and save consumers more than $20 billion in electricity bills over the next 30 years. According to the Electric Power Research Institute, the implementation of smart grid technologies could reduce electricity use by more than 4% by 2030.
One hundred private companies, utilities, manufacturers, cities and other partners received the Smart Grid Investment Grant awards on Tuesday, including Southern, which was awarded $165 million. The company said the funds would be used to augment its investment in grid reliability, and make it more efficient and secure.
Last month, Fitch Ratings affirmed Southern's Issuer Default Rating at 'A'. The revision was attributed to the financial, operational strength and cash flow diversity of its four regulated electric utility subsidiaries, the low risk of its wholesale electric generation subsidiary, the constructive state regulatory environments in which the regulated subsidiaries operate as well as ample liquidity. The rating Outlook was set at "Stable".
Among others in the industry, FPL Group Inc. (FPL) said Tuesday that its net income for the third quarter declined to $533 million, or $1.31 per share from $774 million or $1.92 per share in the year-ago quarter. Quarterly operating revenues declined 17.1% to $4.47 billion from $5.39 billion in the year-ago period.
Progress Energy Inc. (PGN), another peer, is slated to release its third-quarter financial results on October 30. Analysts expect the company to report earnings of $1.18 per share on revenues of $2.80 billion.
SO closed Tuesday's regular trade at $32.65, up $0.07 or 0.21%, on 4.29 million shares. For the past year, the stock traded in the range of $26.48-$37.62.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.