Southern Co., the second-largest U.S. power company by market value, said fourth-quarter profit rose 44 percent as operating and maintenance costs declined and a recovering housing market boosted energy use.
Net income increased to $399 million, or 44 cents a share, from $277 million, or 30 cents, a year earlier, Atlanta-based Southern said in a statement today. Per-share profit was more than the 40-cent average of 16 analysts’ estimates compiled by Bloomberg.
Southern gained 23,000 residential customers last year, the first sign housing is rebounding from the 2008 recession in its four southeastern U.S. states, Chief Financial Officer Art Beattie said in a telephone interview today.
The utility owner expects the economic recovery to continue in 2013, gaining strength in the second half of the year, said Thomas Fanning, Southern’s chairman and chief executive officer. “There’s still a lot of activity on the sideline,” he said in a telephone interview.
Southern’s revenues will also benefit if weather reverts to normal patterns this year after an abnormally warm fourth quarter in 2011, “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. Residential electricity sales, adjusted for weather, rose 6.6 percent in the quarter. Operating expenses fell 7 percent to $2.89 billion as revenue rose less than 1 percent to $3.7 billion.
Southern faces potential cost overruns and delays as it builds the first new U.S. nuclear reactors since the 1970s. Southern’s Georgia Power utility and its construction partners sued each other in November over at least $900 million in added costs to the $14 billion project from delays that resulted when federal regulators took longer than anticipated to approve reactor design changes in 2011 for Plant Vogtle, 26 miles (42 kilometers) southeast of Augusta, Georgia.
While Southern’s contractors have recommended a construction schedule that would bring Vogtle’s twin reactors online in mid-2017 and 2018, about 14 months late, the utility hasn’t approved those plans and will present its own schedule later this quarter, Fanning said.
Federal regulators yesterday approved design changes for steel rebar to be laid in the plants’ foundations, clearing the way for the first concrete to be poured for the reactor’s structure by the end of March, Fanning said.
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.
Southern rose 0.3 percent to $44.76 at 10:10 a.m. 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.