Southern Co. Profit Increases on Colder Temperatures

Southern Co. (SO), the second-largest U.S. power company by market value, said fourth-quarter profit rose 44 percent as operating and maintenance costs declined and colder weather boosted energy use.

Net income rose to $399 million, or 44 cents a share, from $277 million, or 30 cents, a year earlier, Atlanta-based Southern said in a statement on PR Newswire today. Excluding one-time items, per-share profit was more than the 40-cent average of 16 analysts’ estimates compiled by Bloomberg.

Temperatures in the last three months of 2012 dipped below average in the four southeastern states Southern serves, the National Oceanic and Atmospheric Administration said on its website. Weather-driven demand for heating in Georgia, Southern’s largest market, rose 9.4 percent from a year earlier, according to data compiled by Bloomberg.

A drop in temperatures from 2011’s abnormally warm fourth quarter should benefit Southern “because a lot of heating in their states is electric,” Mark Barnett, a Chicago-based utilities equity analyst with Morningstar Inc., said in a phone interview before the earnings were released.

Total kilowatt-hour sales rose 2.4 percent from the same period a year earlier. Operating expenses fell 7 percent to $2.89 billion in the quarter as revenue rose less than 1 percent to $3.7 billion.

Southern has 4.4 million customers in Georgia, Alabama, Florida and Mississippi and capacity to generate more than 43,000 megawatts of electricity, according to its website. That’s enough to power about 34.4 million homes, according to a U.S. Energy Department estimate.

The company’s results were announced before the start of regular U.S. trading. Southern gained 0.6 percent to $44.62 yesterday in New York. The shares have four buy, 13 hold and five sell recommendations from analysts.

Duke Energy Corp. is the largest U.S. utility owner by market value.

To contact the reporter on this story: Julie Johnsson in Chicago at jjohnsson@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net