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

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.

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.