Duke Energy 3Q profit rises
Duke Energy Corp. said Friday its third-quarter earnings soared from a year ago, but its executives acknowledged “we didn’t have the kind of quarter we expected.”
“We’re disappointed that our efforts didn’t translate into stronger financial results for the quarter,” chief financial officer David Hauser told analysts on a conference call.
The current results where hit by lower natural gas prices, unexpected plant outages and higher operating expenses, Hauser said.
“Nearly all of our businesses were off the expected mark for the quarter,” he added.
After preferred dividends, earnings were $763 million, or 60 cents per share, for the three months ended Sept. 30, up from $38 million, or 4 cents per share, in the year-ago period.
The surge reflects how a year ago Duke Energy’s results were depressed by a big charge on the sale of North American energy operations outside of the Midwest.
It also takes into account the addition of Cincinnati-based utility owner Cinergy, which Duke acquired in April.
“With two quarters of combined operations in the books, the new Duke Energy is making good progress in capturing the savings and realizing the promise of the Cinergy merger,” said James E. Rogers, president and chief executive officer of Duke Energy.
The company is also preparing for the spinoff of its natural-gas pipeline and processing units into Spectra Energy Corp., which is scheduled to open in the beginning of 2007.
The company is still on track, Hauser said, and he reiterated the 4 to 6 percent earnings growth expectations for Duke Energy. The natural gas spin-off, which will be called Spectra Energy Corp., is expected to grow 5 to 7 percent.
“We continue to stand by the growth rates post-spin,” Hauser said.
However, the company said 2007 earnings from the two companies will fall short of its previous target.
“This new mix of businesses will translate into something less than our 2007 earnings aspiration of $2 per ongoing diluted share for the two stand alone companies,” Rogers said. “We believe that the trade off of lower earnings in ’07 for a more stable and lower risk company in the future is in our shareholders’ best interest over the long-term.”
The year-ago results included a loss of $883 million, or 92 cents per share, from discontinued operations.
Earnings from continuing operations fell to $717 million, or 56 cents per share, from $924 million, or 96 cents per share, a year ago as a milder summer resulted in less energy use and lower regulated rates. Excluding all items, ongoing earnings totaled 48 cents per share in the latest period.
Duke Energy’s national gas transmission segment reported results fell by $26 million from a year ago. The lower results were largely due to higher operating costs and project financing.
Ongoing earnings for the company’s international energy segment were down $15 million, due in part to higher regulatory fees and lower sales prices in Brazil.
Operating revenue rose 38 percent to $4.17 billion from $3.03 billion last year, exceeding analyst estimates for $3.39 billion, according to a survey by Thomson Financial.
“Despite what was a lackluster quarter when compared with 2005′s strong third-quarter ongoing results, we remain on track to achieve our 2006 employee incentive target, adjusted to reflect the sale of commercial marketing and trading to Fortis, which closed on Oct. 1,” Rogers said.
For the first nine months of the year, Duke Energy reported earnings of $1.48 billion, or $1.27 per share, compared with $1.21 billion, or $1.25 per share, in 2005. Revenue fell to $11.35 billion from $13.63 billion a year earlier.
Duke shares fell 60 cents, or 1.9 percent, to $30.89 in afternoon trading on the
New York Stock Exchange.
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