ATLANTA Southern Companys third-quarter earnings jumped 19 percent, reflecting strong energy sales in the Southeast, increased profitability from its Asian business units and a growing competitive energy supply business in North America, Chairman and Chief Executive Officer Bill Dahlberg announced today.
Southern Company, the largest producer of electricity in the United States and the worlds third largest independent power producer, earned $615 million or 90 cents a share in the third quarter of 1999 a record-high quarterly profit for the global energy company. In the third quarter last year, Southern company earned $517 million or 74 cents a share. Revenues for third quarter 1999 were $3.7 billion, compared with $3.5 billion in 1998s third quarter.
Our strong results show that we are continuing to execute our strategies and deliver on our promised earnings growth, Dahlberg said. Were aggressively expanding our growth in our competitive energy supply business in North America. Weve sharpened our focus internationally. And were continuing to deliver strong results in our regulated business in the Southeast.
Southern Companys five integrated utilities in the Southeast reported $568 million in third-quarter 1999 net income, compared with $497 million for the same period last year. Record-high energy demand, an increased customer base and a growing competitive energy supply business in the Southeast contributed to the increase in earnings. See our earnings highlights(PDF 77KB).
Southern Energy Inc., the subsidiary that includes Southern Companys international operations and its competitive energy supply business, reported $94 million in third-quarter 1999 earnings, compared with $58 million for the same period last year. Its increased contribution to net income was due in large part to growing profitability from its Asian business units and new investments in power-generation businesses in New England, California and New York.
sian investments contributed $45 million in third-quarter 1999 earnings, compared with $23 million for the same period last year. Dahlberg noted that the first of two units at Southern Energys new 1,200-megawatt power station in Sual, the Philippines, began commercial operation this month, and the second unit is in a final testing period and is expected to begin commercial operation by early November. Both units are expected to contribute to fourth-quarter earnings.
Our goal has been to improve our growth and derive 30 percent of our earnings from Southern Energy, and with the companys aggressive growth strategy and excellent management oversight, were almost there, Dahlberg said. Year-to-date, Southern Energy is contributing 22 percent of our earnings.
In the third quarter, Southern Energy posted several one-time items. The company recorded an after-tax gain of $78 million from the sale of its share of South Western Electricitys (SWEB) supply business in England. Southern Energy still owns 49 percent of SWEBs distribution system, which has been renamed Western Power Distribution. Southern Energy also recorded a write-down of $69 million after taxes from its Mobile Energy Services Company, L.L.C., subsidiary.
In addition, Berliner Kraft und Licht AG (Bewag), the electric utility serving metropolitan Berlin, Germany, announced plans to reduce its workforce. Southern Energy, which owns 26 percent of Bewag, took an after-tax charge of $16 million to reflect the cost of early retirement programs through September.
Taken together, the one-time items resulted in a net decrease of about $7 million to third-quarter earnings.
Southern Companys year-to-date earnings were $1.2 billion or $1.67 a share compared with $1.0 billion or $1.48 a share for the same period in 1998. Earnings for the 12 months ending Sept. 30, 1999, were $1.1 billion or $1.59 a share, compared with $1.2 billion or $1.76 a share for the 12 months ending Sept. 30, 1998.
Reviewing operations, Dahlberg said electricity use by retail customers in Southern Company`s traditional service area in the southeastern United States increased 1.3 percent to 110.8 billion kilowatt-hours during the first ninth months of 1999. In-home electricity needs were down 0.8 percent to 34.6 billion kilowatt-hours. Electricity consumption by commercial customers offices, stores and other non-manufacturing firms rose 4.4 percent to 33.2 billion kilowatt-hours. Industrial energy use increased 0.8 percent to 42.2 billion kilowatt-hours.
Total sales of electricity to Southern Companys customers in the Southeast, including sales to other utilities, decreased 0.3 percent to 127.6 billion kilowatt-hours for the first nine months of 1999.
On Thursday, Oct. 21, Southern Company will post to its Web site recorded remarks on third-quarter performance by Chief Financial Officer W. Larry Westbrook. The sites address is www.southernco.com/site/financial/earnings.asp. In conjunction with issuing this earnings announcement, the company also has posted on the site a package of detailed financial information on third-quarter performance.
Southern Company (NYSE: SO) is an international energy company with more than $35 billion in assets through regional utilities and operations around the world. It is the largest producer of electricity in the United States and one of the worlds leading independent power producers. Based in Atlanta, Southern Company is the parent firm of Alabama Power, Georgia Power, Gulf Power, Mississippi Power and Savannah Electric. Through its Southern Energy subsidiary, Southern Company supplies electricity in 10 countries on four continents and has a growing presence in North America with assets in the Northeast, the Midwest, California and Texas. Southern Company also provides energy-related marketing, trading and technical services in the United States and Europe and offers Southern LINC wireless telecommunications.