San Diego, CA-based Sempra Energy Thursday reported unaudited 2001 earnings of $518 million, or $2.52/diluted share, compared to $429 million, or $2.06/diluted share in 2000, a 22% increase, including a bigger share from its nonutility companies. Revenues were $8 billion for the full year in 2001, compared with $7 billion the previous year — a 14% rise.

Despite what he described as the possibility of “difficult market conditions” persisting this year, Sempra CEO Stephen Baum stuck with his earlier earnings estimate of $2.65/share for 2002, and he confirmed that the company has moved up its goal of getting half of its earnings from nonutility businesses by 2004, after profits in that sector shot higher, faster last year, accounting for 36% of the overall 2001 earnings.

“We are committed to maintaining solid investment-grade credit ratings,” Baum said. “Sempra Energy’s financial strength and liquidity have helped attract more business and provide assurance to our customers and partners.”

In response to questions on a conference call with analysts, Baum was asked about Sempra’s previously stated interest in buying some of Enron’s assets. He said the company was still interested, but would give no specifics on current discussions, adding that there are three basic areas in which it has interest: (a) pipelines; (b) trading; and (c) contracts.

The company has two possible trouble areas — in energy trading related to now-bankrupt Enron Corp. and in international businesses in financially troubled Argentina — but in both cases 2001 earnings were not impacted, Baum said.

In trading, Sempra profits were up 26% to $196 million for 2001, compared with $155 million in 2000. But for the fourth quarter, trading net income slipped to $10 million, compared with $52 million for the same period the previous year. The company said that fourth-quarter earnings were impacted by lower prices and reduced volatility in energy markets, along with “a depressed economy and after-tax allowance of approximately $5 million for amounts due from Enron.”

Sempra recorded a $155 million, non-cash reduction to shareholder’s equity in the fourth quarter 2001 to reflect the devaluation of the Argentine peso relative to the U.S. dollar, but said the recent political and economic instability in Argentina had no impact on earnings from its two Argentine distribution utility operations, in which it holds 43% interests. Overall, international operations earnings for the year were down from $33 million in 2000 to $25 million in 2001, however, the company said they would have been $50 million without a $25 million after-tax charge taken related to the company’s surrender of its natural gas distribution franchise in Nova Scotia in the third quarter last year.

The only nonutility earnings that were negative came in the energy resources sector, where the wholesale power generation subsidiary, Sempra Energy Resources, showed a net loss of $27 million in 2001, compared with net income of $29 million the previous year. The loss was due to a contract the company has with the California Department of Water Resources (DWR) to sell discounted power in the first years of a multi-year deal, and that negatively affected the 2001 earnings, Baum said.

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