Profits up at Duke, down at Progress in final pre-merger quarter

Posted August 2, 2012 8:14 a.m. EDT
Updated August 2, 2012 11:53 a.m. EDT

— Duke Energy Corp. (NYSE: DUK) reported profit rose in the second quarter, the last period before its $17.8 billion purchase of Progress Energy Inc. made it the largest U.S. utility owner by market value.

In a separate report, Progress said profits fell to $80 million, or 27 cents per share, down from $211 million or 71 cents per share a year ago.

Net income for Duke was $444 million, or 99 cents a share, compared with $435 million, or 98 cents, a year earlier, Charlotte, North Carolina-based Duke said in a statement Thursday.

Profit rose as the rates paid by its customers in North Carolina and South Carolina for electricity increased, the company said in the statement.

Excluding merger-related costs and other one-time charges, per-share profit was 5 cents more than the 97-cent average of 13 analysts’ estimates compiled by Bloomberg.

Duke’s acquisition of Raleigh-based Progress closed on July 2.

The company announced the next morning that it replaced Progress Chief Executive Officer Bill Johnson with Duke CEO Jim Rogers, who was supposed to become executive chairman of the combined companies. The change triggered investigations by North Carolina regulators and the state’s attorney general.

In the Progress report, increased operating and management costs coupled with less demand for energy due to cooler temperatures were cited as reasons for the earnings decline.

In North Carolina, where Duke has most of its customers, the second quarter was the coolest in three years, according to the National Climatic Data Center. Weather-driven demand for cooling fell 9 percent from a year earlier, according to data compiled by Bloomberg.

Weather was hotter than a year earlier in Ohio, Indiana, and Kentucky, where Duke sells power to 1.6 million homes and businesses, according to data compiled by Bloomberg. The company had 4 million power customers before the acquisition. It now has about 7.1 million, according to its website.

The earnings were released before regular trading began on U.S. markets. Duke fell 0.4 percent to $67.52 yesterday in New York. The shares have three buy, one sell and 17 hold ratings from analysts.