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Sempra’s Quarterly Profit Flat; It Raises ’05 Forecast

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From Bloomberg News

Sempra Energy’s second-quarter profit was unchanged at $121 million as a slump in commodities trading blunted higher income from power generation and the company’s Southern California Gas unit, the largest U.S. natural-gas utility.

Per-share net income fell to 48 cents from 52 cents a year earlier because of an increase in outstanding shares, San Diego-based Sempra said Tuesday. Sales rose 14% to $2.27 billion.

Sempra has expanded commodities trading to capitalize on its expertise in fuel purchasing for its power plants. The company said it expected to make up for the 43% drop in second-quarter profit from trading as natural gas and oil that have accumulated in inventory are sold under contract later this year.

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Sempra raised its earnings forecast for all of 2005 to $3.20 to $3.40 a share from a previous $3.10 to $3.30 on expectations that profit from the commodities unit and utilities would improve in the second half. Sempra earned $3.83 a share in 2004, when commodities trading generated more than a third of earnings.

Shares of Sempra rose 88 cents to $42.90. They are up 17% year to date.

Sempra said it expected to book gains in the second half of the year of $30 million related to a regulatory ruling by the California Public Utilities Commission and $25 million from a settlement with the California Independent System Operator, which manages most of California’s power system.

Second-quarter profit from commodities trading fell to $26 million from $46 million a year earlier. Sempra said the unit ended the quarter with inventories of gas and oil sold for future delivery that may produce $50 million in profit by year-end.

Profit at Southern California Gas rose 16% to $58 million on cost cutting, Sempra said. The company’s San Diego Gas & Electric utility earned $29 million, a 3.3% drop.

At Sempra Generation, which operates power plants and sells electricity on the wholesale market, profit rose 42% to $27 million. Profit at the company’s pipeline and storage business fell 5.9% to $16 million.

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