Sempra’s Profit Rises 48% on Trading Gains

Sempra Energy said Wednesday that fourth-quarter profit rose 48% on gains from the trading of gas, electricity and other commodities.

Net income rose to $346 million, or $1.46 a share, from $234 million, or $1.03, a year earlier, the San Diego-based company said. Sales rose 40% to $2.89 billion.

Chief Executive Stephen Baum has boosted profit by expanding the energy- and metals-trading business. He also is building liquefied-natural-gas import terminals in Mexico and Louisiana to take advantage of growing demand for the fuel.

Shares of Sempra rose 37 cents to $39.65 on the New York Stock Exchange and have gained 28% in the last year.

Fourth-quarter profit from energy trading more than doubled to $171 million from $73 million a year earlier. That exceeded the company’s trading profit of $157 million for 2003.

The surge in trading profit reflects strong demand for natural gas that boosted prices in the quarter, Baum said during a call with investors and analysts.

“We had significant volatility in commodity prices in the fourth quarter,” Baum said. “High prices and volatility are contributors to our trading company doing well.”

Natural-gas futures traded on the New York Mercantile Exchange averaged $7.26 per million British thermal units during the fourth quarter, 34% more than a year earlier.

Sempra raised its 2005 profit forecast to $3.10 to $3.30 a share from an earlier range of $3 to $3.20. The company had been expected to earn $3.18, the average estimate from 12 analysts surveyed by Thomson First Call. Profit was $3.83 a share last year.

Sempra increased its reserve for litigation expenses by $65 million in the fourth quarter to $250 million, company executives said during the call. Sempra faces lawsuits accusing it of energy-market manipulation during California’s energy crisis in 2000 and 2001. Baum said the accusations were without merit.

Fourth-quarter profit at Sempra’s Southern California Gas and San Diego Gas & Electric utilities fell by a third to $126 million. In the fourth quarter of 2003, San Diego Gas had a $79-million gain related to the resolution of tax issues.