Earnings preview: Duke Energy reports 2Q results

Duke Energy's second-quarter results expected to slip on weather, write-down

Associated Press

NEW YORK (AP) -- Duke Energy Corp. is expected to post modest quarterly results because of losses related to nuclear operations in Florida and more moderate weather in its service territory. The second-quarter earnings report is expected Wednesday before the opening of trading on Wall Street.

It will be the first quarterly earnings delivered by the company's new chief executive, Lynn Good, the former Duke CFO who assumed the company's top job July 1.

Duke reached a settlement with Florida regulators last week over its investment in the crippled Crystal River nuclear station, which Duke has decided to shut instead of repair, along with its investment in studies for a new nuclear power plant in Levy County, which Duke has decided not to build.

As part of the settlement, Duke says will take a charge of $360 million against second-quarter earnings.

Duke's results may also be reduced by milder weather in its service territory during the period. More moderate temperatures mean lower electricity demand because homes and businesses need less power to run air conditioners.

WHAT TO WATCH FOR: Analysts are pleased with Duke's recent moves to reach settlements and rate agreements in several states in recent months, including in Florida over nuclear operations, in Indiana over an over-budget coal plant, and in the Carolinas over rate increases.

"They've done a great job of detailing what they need to do and going out and doing it," says Andy Smith, an analyst at Edward Jones.

With many of Duke's legal and regulatory issues resolved, investors will want to hear Good's strategic vision for the company in her first earnings announcement as CEO.

Investors will also look closely at power demand after the effects of weather have been removed. Good has warned in the past that electric-demand growth will likely be very modest because of efficiency programs and a sluggish economy.

WHY IT MATTERS: Duke is the largest utility in the U.S. by market value and number of customers. It serves 7.2 million customers in North Carolina, South Carolina, Florida, Indiana, Ohio and Kentucky. Because electricity demand rises with economic activity, the company's results can reflect changes in the broader economy.

WHAT'S EXPECTED: Analysts expect Duke to earn 93 cents per share on revenue of $5.73 billion on average, according to FactSet.

LAST YEAR'S QUARTER: Duke, which had not yet completed its acquisition of Progress Energy until the end of last year's quarter, earned $444 million, or 99 cents per share, on revenue of $3.58 billion in the second quarter of 2012.

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