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Southern Company’s Revenue Fell in 1Q16 on Mild Weather

Vincent Kruger

Southern Company: Still Not a Tempting Option after 1Q16

Southern Company reports lower EPS

Southern Company (SO) posted its 1Q16 results on April 27, 2016. It earned $0.53 per share in the quarter against its earnings of $0.56 per share in 1Q15. Unfavorable weather continued to lower electricity usage in the quarter.

Southern Company’s operating revenue fell more than 5% during 1Q16. Its operating revenue was $4.0 billion compared to $4.2 billion in 1Q15. Let’s look at this in more detail.

Revenue drivers

Southern Company missed analysts’ revenue expectations yet again this quarter as weather negatively affected utility (FUTY) sales. Analysts were expecting Southern Company to report revenue of $4.3 billion for the quarter.

Southern Company’s total energy sales in 1Q16, including wholesale energy sales, fell by ~1.7% compared to its sales in 1Q15. Kilowatt-hour sales to retail customers in all four of SO’s major operational states fell by 3% compared to 1Q15.

Southern Company managed to add 14,000 new residential customers during the quarter compared to the previous comparable period. Southern Company’s commercial customer category also continued to display higher sales during the quarter. Both of these factors partially compensated for the negative impact of unfavorable weather.

Southern Company’s chairman and CEO Thomas Fanning said, “Southern Company performed superbly in executing its business plan in the first quarter of 2016. We saw positive customer growth, along with strong residential and commercial sales and a robust economic development pipeline.”

Southern Company is the first to report its 1Q16 earnings among the utility giants. Duke Energy (DUK) and Dominion Resources (D) are set to report their earnings on May 3 and May 4, respectively, while NextEra Energy (NEE) is set to report on April 28, 2016.

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