By Suzanne Herel
Duke Energy last week confirmed it plans to sell its international business, which has been bedeviled by drought and weak currency exchange rates, the company said as it announced its fourth-quarter earnings.
“The returns over the last two years are inconsistent with our commitment to investors to provide predictable, stable earnings and cash flows. We believe there will be demand for this international portfolio at a reasonable valuation. The proceeds will be used to strengthen our balance sheet and help fund growth in our core businesses,” CEO Lynn Good said on a call with analysts.
“We expect that a sale will be dilutive,” she said. “Nonetheless, the strategic exit significantly improves our risk profile and enhances our ability to generate more consistent earnings and cash flows over time.”
Good said it was too early to provide a timeline for the transaction, which involves facilities in Brazil, Chile and Central America. Year over year, the international business saw adjusted income of $225 million, down from $428 million in 2014. In reporting Duke’s third-quarter 2015 earnings in November, CFO Steve Young had predicted the division’s earnings to stabilize by the end of the year and show modest growth in 2016.
Net income for Duke for the fourth quarter was $477 million, compared with $97 million for the same quarter in 2014. For the full year, the company reported earnings of $2.8 billion, compared with $1.9 billion in 2014.
Earnings per share for the fourth quarter were 87 cents, up slightly from a year earlier. For 2015, earnings per share were $4.05, compared with $2.66 the previous year.
“Fourth-quarter adjusted results were supported by increased retail pricing and wholesale margins in the regulated business, helping to offset the impact of record mild December weather in the Carolinas,” the company said in a release.
Discussing the company’s overall strategy, Good said, “Our industry is undergoing transformation with new technologies, evolving customer expectations, increasingly impactful public policies and abundant low-cost natural gas. These factors will have a profound impact on our business in the years ahead and are informing our strategic investments. We are focusing our long-term strategy on our core domestic regulated businesses and our highly contracted renewables portfolio.”
She also noted that Duke has “taken what we learned from the Dan River spill in early 2014 and applied it throughout our organization to strengthen operational discipline and results.”
A near-term focus has been working through closing the company’s coal ash ponds.
“Our intent would be to seek recovery in connection with a general base rate increase, which … would be toward the latter part of this planning period,” she added.