Sempra Earnings Rise on Trading Profit Gain

Sempra Energy, owner of the largest U.S. natural gas utility, on Tuesday said 2004 per-share profit rose to about $3.80, exceeding the company’s forecast of $3.15 to $3.25 as earnings from commodities trading increased.

The estimate excludes one-time items, such as a gain from a regulatory settlement, the San Diego-based company said. On that basis, profit was expected to rise to $3.21 a share, the average estimate of 10 analysts surveyed by Thomson First Call, from 2003’s $2.93. Sempra’s fourth-quarter earnings report is scheduled for release Feb. 23.

“This is about $141 million of extra earnings in the fourth quarter from trading,” said Stacy Saul, an analyst at W.H. Reaves & Co. in Jersey City, N.J. “This is money they can invest profitably in their utilities to hook up new customers, or to buy or build power plants.”

Chief Executive Stephen Baum expanded Sempra’s trading of electricity and natural gas as other energy companies retreated after the 2001 collapse of Enron Corp. Sempra trades gas, electricity, oil and metals.

Shares of Sempra on Tuesday rose 38 cents, or 1%, to an all-time closing high of $39.38 on the New York Stock Exchange. The stock, which has climbed 7.4% this year, has four “buy” ratings and seven “hold” ratings from analysts.

Baum, 64, raised Sempra’s profit forecast by 20 cents a share in June, citing an expected surge in trading profit. At the time, Sempra said it expected energy-trading earnings of $150 million to $190 million, up from $94 million in 2003. The company didn’t give an estimate for trading profit Tuesday.

“I wouldn’t assume this increase in earnings from trading is sustainable unless the company says so, and they haven’t,” Saul said.