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Duke, Progress earnings fall; merger plan being revised

Posted February 16, 2012

Duke Energy's (NYSE: DUK) fourth quarter earnings fell 33 percent as mild weather reduced demand for electricity.

Meanwhile, Progress Energy (NYSE: PGN) in Raleigh reported a fourth-quarter loss due in large part to a big settlement with rate payers in Florida.

Progress and Duke are in the process of seeking approval to merge.

Progress reported a decline in revenues to $1.74 billion in the fourth quarter from $2.3 billion a year ago. Annual revenues declined to $8.9 billion from $10.2 billion. Progress said it lost 25 cents per share, citing a $288 million rate settlement with regulators in Florida.

Like Duke, Progress also said milder weather affected sales.

Duke, which is based in Charlotte, earned $288 million, or 22 cents per share, down from $427 million, or 32 cents per share, in the fourth quarter of 2010.

The year-earlier results were helped by a sale of a fiber optic company. This year, Duke incurred costs associated with its proposed merger with Progress.

Duke's earnings, adjusted to remove the effects of special items, rose 14 percent to 24 cents per share. Revenue was $3.37 billion. Analysts polled by FactSet expected earnings of 21 cents per share on revenue of $3.36 billion.

Results were helped by strong performance of its international operations.

For the full year, Duke Energy Corp. earned $1.71 billion on revenue of $14.53 billion.

Duke and Progress are in the process of changing their merger plan and reapplying for approval. Rogers said he expects to file the new application in the next week.

"We're hoping the third time is the charm," Rogers said.

Progress Energy said Thursday that it lost $76 million in the fourth quarter, down from a profit of $125 million a year earlier. On a per share basis, the company lost 25 cents, down from net income of 42 cents per share a year earlier.

Progress is paying a nearly $300 million refund to Florida customers. That reduced earnings by 60 cents a share, the company said.

Progress also suffered from mild temperatures in the quarter, especially in Florida. There were 71 percent fewer heating degree days, an industry measure used to gauge weather effects, and 5 percent fewer cooling degree days.

Franzen said investors shouldn't be disappointed by Progress's results. The Florida refund was expected and weather — not poor operational performance — accounted for the weaker earnings.

Shares in both Duke and Progress rose slightly more than 1 percent in morning trading.

10 Comments

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  • walences Feb 23, 2012

    Break up the monster power companies. Dont let them merge. WE need local business with local ties and local needs. NOT giant mega-companies who care nothing about local folks.

  • 1percentplus Feb 17, 2012

    OMG! "The Forida refund was expected and weather - not poor operational performance - accounted for the weaker earnings." Are you kidding? Look at this link:

    http://www.tampabay.com/news/business/energy/many-unanswered-questions-in-crystal-river-nuclear-plant-settlement/1211976

    Why isn't this getting more news coverage up here?

  • retiredinflorida48 Feb 17, 2012

    Let's go over it again. Duke is proposing to buy Progress for $13.7 Billion. Progress has an acknowledged debt (as of last year, see next paragraph) of $12.2 Billion. Therefore, the cost of buying Progress is $25.9 Billion, assuming Duke plans to eventually pay the debt off, and ignoring compound interest on the debt. How much did they promise the utility commision folks they would save? $650 Million. So to bring it down to earth: would you spend a few dollars short of $3000 just to save $65? Perhaps they need to hire some MBAs to show them how to better invest the consumer's money. If this is the financial logic that they use, then yes, expect more and more rate hikes.

    And since the WRAL story did not tell you why Progress had to pay back almost $300 million to the Florida customers, just Google "Crystal River plant problems", and you will see that the $300 million is just a drop in the bucket, and just the beginning of bleeding of Duke shareholders if they buy Progress. At a g

  • notodukpgnmerger Feb 16, 2012

    The response to the merger issue from FERC remains a non-starter. Future transmission and some contracts in between - no deal. It appears PGN wants this deal much more than Duke and the miserable quarter tells it all. NCUC should not even consider this deal nor should FERC.

  • mfarmer1 Feb 16, 2012

    >> "Duke Energy Corp. earned $1.71 billion on revenue of $14.53 billion"

    that's a big profit.

  • Scubagirl Feb 16, 2012

    the merger plan NEEDS TO BE TRASHED!!! As a customer of PE, and shareholder of DE I do not think it's in my best interests or those of anyone else!

  • peterpepper Feb 16, 2012

    they'll do just like Randolph electric did to us, once again.
    RATE HIKES !!
    Just when you think your power bill will be lower due the the weather they jack the fees up .

  • westernwake1 Feb 16, 2012

    This merger is not in the interest of Duke and Progress shareholders or customers. Let's hope the entire merger deal falls apart.

  • Rebelyell55 Feb 16, 2012

    Better be call your rep. in Raleigh or ya'll be facing some serious rate hikes. Dukes got their and I'm hoping Roy Cooper can put a stop to it. This would be very bad for NC. Here they show they're making a profit, just not much due to weather, well other people are effected by the weather also, doent' mean they get to go raising rates. (except the gas companies). Time to stop this abuse.

  • nggeoteach Feb 16, 2012

    Guess this is why PE won't reply to our email requests. . . no, it has to be they are totally involved w/merger mess.