Financing Costs for Texas Utility Acquisition Cause Sempra Profits to Fall

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Sempra Energy’s headquarters in downtown San Diego. Photo courtesy of Sempra

San Diego-based Sempra Energy reported lower first-quarter earnings on Monday as financing costs rose in connection with its acquisition of Texas’ largest utility.

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The San Diego-based utility holding company, which owns San Diego Gas & Electric, earned $347 million, or $1.33 per share, compared with $441 million, or $1.75 per share, in the same quarter last year. Revenue declined to $2.96 billion from $3.03 billion a year ago.

“During the quarter, we successfully implemented our leadership succession plan, completed the Oncor transaction and continued execution of our capital program in our utility and infrastructure businesses,” said CEO Jeffrey W. Martin. “Our underlying business performance was solid and consistent with our expectations.”

In March Sempra completed its $9.45 billion acquisition of an approximate 80-percent indirect ownership interest in Oncor. The company said it expects up to $360 million for its portion of partial-year earnings from Oncor in 2018.

Sempra said its profits were also hit by a $25 million income-tax expense as a result of federal tax reform.

The company’s stock closed at $110.68 Monday on the New York Stock Exchange, down more than $1.

With the acquisition of Oncor, Sempra has the largest number of U.S. customers of any utility holding company.

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