Sempra Expects Profit to Climb 12% in 2003

Sempra Energy, owner of California electric and gas utilities, said 2003 profit probably will rise 12% from projected earnings this year, boosted by energy trading, power generation and pipeline business.

Profit next year will increase to about $615 million, or $2.90 a share, from estimated earnings of $550 million, or $2.65, this year, Chief Executive Stephen Baum said at a conference with analysts and investors.

The San Diego company was expected to earn $2.61 a share this year and $2.84 in 2003, the average estimates of analysts polled by Thomson Financial/First Call.

Since the deregulation of California’s power market in 1998, Sempra has been expanding in energy trading and power plants outside the U.S. Sempra’s San Diego Gas & Electric, California’s No.3 investor-owned electric utility, largely escaped the problems that drove the state’s two largest utilities to insolvency last year.

“It’s a positive, given the weak conditions in the energy industry year-to-date,” that the company is reaffirming its forecasts, said Argus Research analyst Jeffrey Gildersleeve, who rates Sempra “hold” and doesn’t own the stock.

Increases in profit will come from a natural-gas pipeline and power plants in northern Mexico and the U.S. Southwest and “robust” trading operations, Baum said. “We think this is a strong basis for meeting our goal of 8% to 10% growth for 2002 and beyond.”

By 2004, about 50% of Sempra’s earnings will be from businesses that aren’t regulated by the California Public Utilities Commission, Baum said.

Sempra shares were down 19 cents to $24.93 on the New York Stock Exchange. They have dropped 12% in the last year.