Utility Southern Co. earnings rise, revenue falls
by AP News Now
November 05, 2012 12:45 PM | 776 views | 0 0 comments | 5 5 recommendations | email to a friend | print
ATLANTA (AP) — Southern Co.’s net income rose 6.6 percent in the third quarter as lower operation and maintenance costs offset lower electricity sales.

Operating revenue at the nation’s second biggest utility by market value fell 7 percent because weather in its service territory was much milder than last year. When summer temperatures are relatively cool, businesses and homes use less electricity to run air conditioners.

The company’s electricity sales fell 5 percent during the quarter. Southern serves 4.4 million customers in Alabama, Georgia, Florida and Mississippi.

But the company said that was "offset by reductions in non-fuel operations and maintenance expenses" as well as other factors.

Southern CEO Tom Fanning said in an interview that a slower global economy in the third quarter also reduced sales of electricity. After strong growth in the first quarter and moderate growth in the second quarter, "In the third quarter it looks like the economy has ground to a halt," he said.

Fanning also said that weaker economic growth in China and Brazil were slowing the production of chemicals and steel in Southern’s service territory.

Southern reported net income of $976 million, or $1.11 per share, for the July-September quarter, up from $916 million, or $1.07 per share, a year ago.

Analysts had expected the company would earn $1.13 per share, according to FactSet.

Revenue fell 7 percent to $5.05 billion from $5.43 billion a year ago.

Southern Co. shares fell $1.18, or 2.6 percent, to $44.59 in morning trading.

Fanning said businesses are "sitting on the sidelines" until they get a better idea of what the political and economic landscape might look like after the presidential election. They are particularly worried about the looming "fiscal cliff" — automatic budget cuts and tax hikes that are set to kick in next year if Congress doesn’t act.

He said there was an enormous backlog of business investment and construction projects ready to go forward, however, if the political clouds clear up. "There’s a tremendous amount of latent activity," he said. "It’s not a Democrat or a Republican issue, it’s a worldwide issue. We have to figure out how to grow the economy and have fiscal discipline."

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