Duke Energy posts 30 pct drop in 3Q profit

AP News
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Posted: Nov 03, 2011 8:08 AM
Duke Energy posts 30 pct drop in 3Q profit

Duke Energy Corp. said Thursday that profits declined about 30 percent in the third quarter as power sales fell and it incurred larger-than-estimated costs for a new power plant in Indiana.

The Charlotte, N.C., power company reported earnings of $472 million, or 35 cents per share, for the three months ended Sept. 30. That compares with $670 million, or 51 cents per share, for the same part of 2010. Revenue was flat at $3.96 billion.

Excluding special costs including overruns for its coal gasification plant in Indiana, Duke says adjusted earnings were 50 cents per share.

The results beat Wall Street profit expectations, but they fell short of revenue estimates. Analysts, who typically exclude special items, expected a profit of 47 cents per share on revenue of $4.11 billion, according to FactSet.

The company also increased its forecast for 2011 earnings to between $1.40 and $1.45 per share from $1.35 to $1.40 per share.

Shares rose 22 cents, or 1 percent, to $20.65 in premarket trading.

Duke, which serves 4 million electric and gas customers in the Carolinas, Kentucky, Indiana and Ohio, said power sales fell during the quarter for its residential, general service and industrial customers.

Power demand usually peaks during the July-September period as customers crank up their air conditioners. While this summer was hot, last summer was even warmer, the company said.

Internationally, Duke sold more power, increasing operating revenues 31.9 percent for its international business.

Meanwhile, costs to build its Edwardsport coal gasification plant continued to rise above estimates. Duke said its current cost estimate for the project is $2.98 billion, up from original estimates of $1.87 billion and the $2.72 billion cost cap that it proposed. Duke took a $220 million impairment charge in the quarter to account for the higher costs.

Regulators are holding hearings this week on the plant's costs.

Duke will become the largest U.S. utility if it succeeds in buying Progress Energy Inc. The deal is expected to close by the end of the year, although state and federal regulators have not yet approved it.