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NEW YORK (AP) - Duke Energy Corp. posted a sharp drop in second-quarter profit on costs related to closing a crippled nuclear power station in Florida and milder weather in its service territory.
Duke, the nation's largest utility by number of customers and market value, said Wednesday that it earned $399 million, or 48 cents per share, in the April-to-June quarter. That's down from $444 million, or 99 cents per share, a year ago.
Adjusted to remove the effect of one-time items, the company earned 87 cents per share. That was below analysts' expectations for earnings of 93 cents per share, on average. Duke shares were down 30 cents, or 0.4 percent, to $70.80 in trading before the market opened.
Revenue rose to $5.88 billion from $3.58 billion a year earlier, and exceeded investor expectations of $5.73 billion. Last year's figures did not include results from Progress Energy, which Duke acquired after the end of last year's second quarter.
Duke CEO Lynn Good said in an interview Wednesday that she expects the company's results to improve in the second half of the year as higher rates in several of the states Duke services come into effect.
Duke, based in Charlotte, N.C., serves 7.2 million customers in North Carolina, South Carolina, Florida, Indiana, Ohio and Kentucky.
Good said sales of electricity to industrial customers rose 1.2 percent, helped by higher demand from automotive manufacturers, building and construction companies, and food and beverage makers. But steel companies in the Midwest slowed down, she said, reflecting a weak global economy.
Demand for electricity rises and falls with economic activity, and can offer clues to the pace of economic growth. Good said demand is on pace to grow 0.4 percent this year, compared with the company's original forecast for growth of 0.5 percent. She said the company remains "cautious" in its outlook for the economy.
Duke remains on track to post full year earnings of $4.20 to $4.45 per share, adjusted to remove one-time items, Good said.
The weakness in Duke's results was tied to divisions outside of the company's large regulated utility operations. The company's international results were dragged down by an extended maintenance outage at a plant Duke partly owns with a Saudi Arabian company that produces gasoline additives.
The company's commercial power division, which sells wholesale power, saw profit plunge on lower prices from its coal and gas generation fleet in the Midwest. Low power prices in the Midwest have been hurting wholesale generators across the region for many months.
"It was an OK quarter," said Andy Smith, an analyst at Edward Jones. "Decent results at the core utility, and lower than expected results at other operations."
When Duke acquired in-state rival Progress Energy last year, it inherited the crippled Crystal River nuclear station and plans to build a new nuclear station in nearby Levy County. Duke concluded in February that repairing Crystal River would be too expensive and instead decided to close the plant. Then earlier this month it abandoned plans to build a new nuclear station in part because natural gas-fired electricity has become so cheap.
Last week Duke reached a settlement with Florida consumer advocates on how to spread the costs of closing the Crystal River reactor and ending the agreement to build the Levy County reactor. As a result, Duke took a charge against earnings in the second quarter of $382 million, which reduced earnings by 34 cents per share.
Milder weather in the Duke's service territory lowered earnings by 5 cents a share, Duke said.
June was particularly wet and cool. Mild weather lowers electricity demand because customers don't need to run air conditioners as often. The number of cooling degree days, an industry measure of electricity demand, fell 32 percent in Indiana during the period, 21 percent in Ohio, and 17 percent in the Carolinas.
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