Duke Energy Q4 Profit Misses View; Sees 2015 Earnings Below Estimates

(RTTNews) - Electric utility Duke Energy Corp. (DUK) on Wednesday reported an 86 percent decline in profit for the fourth quarter from last year, reflecting one-time charges. Adjusted earnings per share for the quarter missed analysts' estimates. Looking ahead, the company forecast earnings for fiscal 2015 below analysts' expectations.

Further, Duke Energy said that after completing a strategic review of its International Energy business, it plans to continue to own and operate the business.

The company also expects to reach a settlement agreement with the U.S. government in the coming days, regarding the ongoing federal grand jury investigation of the February 2014 Dan River coal ash spill.

For the fourth quarter, net income attributable to the company was $97 million or $0.14 per share, down from $688 million or $0.97 per share in the prior-year period.

The latest quarter's results include, among other items, a tax charge of $0.53 per share resulting from the company's plan to access $2.7 billion in undistributed foreign earnings following completion of a strategic review of its International Energy business.

The results also include a charge of about $0.14 per share related to the company's assessment of probable financial exposure related to any proposed agreement regarding the Dan River spill.

Adjusted earnings for the quarter were $0.86 per share, compared to $1.00 per share in the year-ago period. On average, 13 analysts polled by Thomson Reuters expected the company to report earnings of $0.88 per share for the quarter. Analysts' estimates typically exclude special items.

The company noted that adjusted earnings for its regulated utilities in the quarter were impacted by higher operations and maintenance expenses, primarily related to nuclear outage cost levelization in the Carolinas as well as timing of fossil plant outages.

In the non-regulated businesses, higher PJM capacity revenues for the Midwest Generation fleet and increased results from the renewables business were offset by lower earnings at International Energy resulting from the widespread drought in Brazil.

Regulated utilities' operating revenues for the quarter increased 1 percent to $5.20 billion, while International Energy revenues declined 19 percent to $306 million and commercial power operating revenues decreased 15 percent to $60 million. Other operating revenues declined 32 percent to $26 million.

For fiscal 2014, net income attributable to Duke Energy declined to $1.88 billion or $2.66 per share from $2.67 billion or $3.76 per share last year. Adjusted earnings for the year were $4.55 per share, compared to $4.36 per share in the prior year.

Total operating revenues for the year grew 5 percent to $23.93 billion from $22.76 billion last year.

Street expected the company to earn $4.57 per share for the year on revenues of $25.59 billion.

Looking ahead to fiscal 2015, Duke Energy forecast adjusted earnings in a range of $4.55 to $4.75 per share. Analysts expect the company to report earnings of $4.76 per share for the year.

The company has also updated through 2017 its longer-term 4 to 6 percent average annual growth in adjusted earnings per share, based on the midpoint of the original 2013 adjusted earnings outlook range of $4.20 to $4.45 per share.

Duke Energy said that after completing a strategic review of its International Energy business, it plans to continue to own and operate the business. The company has developed a plan to access $2.7 billion in undistributed foreign earnings through 2022 in a tax efficient manner.

Further, the company said it is in settlement talks with the U.S. government regarding the ongoing federal grand jury investigation of the February 2014 Dan River coal ash spill and ash basin operations at other North Carolina coal plants.

The company expects a proposed agreement could be reached and filed in the next several days for consideration by the court. If approved, the proposed agreement would resolve the ongoing grand jury investigation of the company's coal ash basin management.

DUK closed Tuesday's trading at $79.39, down $0.45 or 0.56 percent on a volume of 6.29 million shares.