* Q2 shr $0.61 vs. estimate of $0.59
* Q2 revenue down about 8 pct * Industrial electricity sales down the most
* Industrial sales decline to continue as similar pace
* On track to achieve cost savings of $200-$300 mln for yr
(Adds CEO comments)
By Hezron Selvi BANGALORE, July 29 (Reuters) - Power company Southern Co (SO.N) reported better-than-expected quarterly earnings as lower operations and maintenance costs offset the fall in revenue resulting from lower electricity demand.
The economy continued to hurt earnings, with industrial electricity sales sustaining the greatest impact, dropping 17.6 percent in the quarter, the company said.
“When you look at what the major drivers are in the industrial sector, its primarily steel manufacturers and chemical manufacturers,” Chief executive David Ratcliffe said over the phone.
Ratcliffe expects industrial segment sales decline for the rest of the year to be similar to the second quarter.
However, the stabilization in sectors such as textile and military is helping to offset the weakness in the industrial space, he said.
“So one particular sector can take us down but it can’t absolutely kill us,” Ratcliffe said.
Revenue at the company, one among the several U.S. power producers hoping to build new nuclear reactors, fell about 8 percent to $3.9 billion, while analyst had expected $4.3 billion.
However, total operating expenses for the quarter fell 9 percent to $3.0 billion.
“We began the year with a very aggressive program to control our costs by freezing base salaries, hiring, and cutting travel expenses,” the CEO said.
“We believe we are on track to take about $200 million to $300 million out of the operations and maintenance costs of our business this year,” he added.
Ratcliffe noted that so far the company has managed to achieve about $100 million of cost savings.
For the latest second-quarter, the company posted earnings of $478.6 million, or 61 cents share. Analysts, on average, were looking for earnings of 59 cents a share, before items, according to Reuters Estimates.
The Atlanta-based company owns and operates more than 42,000 MW of generating capacity, markets energy commodities, and transmits and distributes electricity to nearly 4.4 million customers in Georgia, Alabama, Mississippi and Florida.
One MW powers about 500 homes in Georgia.
Shares of the company were trading up 0.16 percent at $32.05 in afternoon trade on the New York Stock Exchange. (Additional reporting by Adveith Nair; Editing by Savio D’Souza, Jarshad Kakkrakandy)