Duke Energy Corp.
) reported adjusted first quarter 2013 earnings of $1.02 per
share that came below the Zacks Consensus Estimate of $1.04. The
quarterly earnings also fell below the year-ago figure of $1.13
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The lower numbers mainly reflect the impact of share dilution
from the Progress merger and less favorable results from the
company's Commercial Power and International Energy units. The
Commercial Power unit witnessed weak results from the Midwest
generation fleet primarily owing to lower PJM capacity prices,
while the International Energy division was adversely impacted by
lower volumes and higher purchased power costs in Brazil due to a
delay in the rainy season.
Duke Energy's top line climbed a significant 62.5% year over year
to $5,898.0 million in the reported quarter. The reported figure
also beat the Zacks Consensus Estimate of $5,733.0 million.
On the cost front, total operating expenses were $4,685.0
million, up 49.3% from $3,138.0 million in the year-ago quarter.
The company registered a considerable improvement in its
quarterly operating income to $1,215.0 million from $495.0
million in the same period last year.
Quarterly Segmental Highlights
U.S. Franchised Electric and Gas:
Segment income was $656.0 million, up from $344.0 million a year
ago. The results were driven by the addition of Progress Energy's
regulated utility operations in the Carolinas and Florida,
increased pricing due to revised customer rates at Duke Energy
Carolinas, favorable weather and improved wholesale revenues
including new contracts.
Segment income declined to $97.0 million from $142.0 million due
to lower volume and higher purchased power costs in Brazil,
unfavorable foreign exchange rates primarily in Brazil, and lower
volumes and pricing at National Methanol Corporation.
Segment income was $6.0 million, down 80% from the year-ago level
of $30.0 million. The results reflect weak results from the
Midwest coal and gas generation fleets.
The segment includes corporate governance expenses, costs
associated with the company's 2010 voluntary employee separation
plan, costs-to-achieve the merger with Progress Energy and
results from Duke Energy's captive insurance company.
Net expenses were $43.0 million, up from $10.0 million in the
year-ago quarter. The significant increase reflects addition of
interest expense on Progress Energy's corporate debt.
At the end of Mar 31, 2013, the company held cash & cash
equivalents worth $1,296.0 million versus $1,424.0 million at the
end of 2012. Long-term debt decreased to $38,407.0 million
(including current maturities) from $38,609.0 million at the end
of 2012. In the first quarter 2013, the company generated
$1,091.0 million from operating activities versus $872.0
generated in the year-ago quarter.
Duke Energy maintained this year's adjusted earnings guidance
range of $4.20 to $4.45 per share.
Duke Energy presently retains a short-term Zacks Rank #3 (Hold).
There are other stocks that are worth buying now. These include
Brookfield Infrastructure Partners L.P.
Empresa Nacional de Electricidad S.A.
The AES Corporation
). Brookfield Infrastructure and Empresa carry a Zacks Rank #1
(Strong Buy), while AES retains a Zacks Rank #2 (Buy).