Duke Energy was able to offset a slump in its international business thanks to increased revenue from its U.S. regulated operations and the early closing of certain strategic initiatives, the company said in announcing its third quarter results.
The Charlotte, N.C., company reported earnings per share of $1.35, compared with $1.80 a year ago. Adjusted earnings — excluding special items and discontinued operations — were $1.47/share compared with $1.40/share over the same period last year.
The company also narrowed and reduced its full-year guidance to $4.55 to $4.65/share from $4.55 to $4.75.
“This range reflects mild October weather as well as storm expenses, unfavorable foreign currency trends and the potential for extending bonus depreciation,” CEO and President Lynn Good said on an earnings call with analysts.
Duke’s international business has experienced a decline, contributing in 2015 about half of the $0.60/share it did in 2013 and 2014, CFO Steve Young said. “About half of this decline is due to the three-year drought in Brazil, while unfavorable exchange rates and lower crude oil prices comprise the remaining half,” he said.
Income from the international business was down to $69 million in the third quarter compared with $80 million in 2014.
Young said the division’s earnings are expected to stabilize by the end of the year and show a modest growth in 2016, when hydro dispatch is predicted to improve.
“Over the past several months, we have begun to see higher water inflows and lower market power prices,” he said. “Further, meteorologists are forecasting a strong El Nino weather pattern through early 2016, which could lead to increased rainfall in Southeastern Brazil.”
Earnings from Duke’s commercial portfolio dropped $0.08/share, primarily as a result of the sale of the Midwest Generation business to Dynegy, which closed in April. Weak wind resources this year have led the company to lower its full-year expectations from $100 million to $75 million, Young said.
However, the commercial business — unregulated renewables and commercial electric and gas transmission — is expected to get a boost next quarter from tax credits related to more than 300 MW of wind and solar generation that is set to come online.
The regulated business benefited from the recently completed acquisition of 700 MW of generation from the North Carolina Eastern Municipal Power Agency. The business also was boosted by the first warmer-than-normal summer since 2012 in the Carolinas.
“On the regulated side, we’re on track to complete construction of 128 MW of utility-scale solar in North Carolina by the end of this year, and are moving forward with investments in both South Carolina and Florida,” Good said.
Young said Duke Energy also has been successful in attracting new business that is expected to add nearly 7,200 jobs in its six-state service area.
— Suzanne Herel