Yahoo Finance Southern Company’s Revenues Fell 10% due to Warmer Weather
Southern Company’s 4Q15 Revenues Fell 10% on Warmer Weather
Contribution by segment
Southern Company’s (SO) traditional operating companies continued their growth momentum in 4Q15 despite weaker demand. On the other hand, the unregulated business handle of Southern Company, Southern Power, posted slightly worse numbers in 4Q15 compared to the same quarter last year.
Southern Company’s revenues fell 10% during the quarter due to warmer weather. However, Southern Company managed to post positive net income change year-over-year due to lower operating and maintenance expenses during the quarter.
Traditional operating companies
The four major operating subsidiaries of Southern Company experienced revenue headwinds due to subdued demand during the quarter. Lower electricity usage per customer led to dismal sales growth, which was partially offset by residential customer base growth. Weather-adjusted sales grew by 0.4% in 2015 compared to 2014. More than 37,000 new customers were added in 2015.
Each quarter of 2015 experienced higher sales in the commercial customer category for the first time since 2008. Sales from the industrial class continued to remain under pressure due to adverse economic factors like a stronger dollar and weakening demand overhang.
Georgia Power, SO’s principal subsidiary, saw its revenues fall by 11% during the quarter compared to 4Q14. Southern Company estimates that its sales will grow by 1.1% in 2016 as a result of continued growth momentum in residential sales.
Southern Power
Southern Power’s net income fell to $34 million in 4Q15 from $44 million in 4Q14. Southern Power added renewable (TAN) projects to its generation portfolio throughout the year, which contributed to its performance. However, lower power prices during the quarter dented the earnings.
Southern Company forms 8% of the Utilities SPDR ETF (XLU). NextEra Energy (NEE), Duke Energy (DUK), and Dominion Resources are a few of the top holdings in XLU, which together form ~25% of the ETF.
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