Duke Energy, the second-largest U.S. electric utility by market capitalization, shares rose more than 3 percent Thursday after the company reported lower earnings due to a trimming of some of its foreign assets.
Duke reported a fourth-quarter loss of $227 million, or 33 cents a share, compared to the $477 million in profits and 69 cents a share of one year earlier. The company attributed the loss largely to the sale of its international business.
The company also had costs of around $200 million associated with Hurricane Matthew in October. The storm resulted in 1.7 million customer power outages, most of which were in eastern North Carolina.
Duke posted full-year earnings adjusted for one-time costs of $4.69 a share, up from $4.54 in 2015, reflecting the company’s boosted domestic position.
Duke had expected 2016 earnings to fall at the high end of its guidance costs of $4.50 to $4.70 a share, citing a strong third quarter driven by warm weather that had customers cranking up their air conditioning and the early close of its $4.9 billion acquisition of Charlotte-based Piedmont Natural Gas in October.
“We’re very pleased,” said Steve Young, chief financial officer at Duke Energy, in a Bloomberg broadcast interview. “In 2016 we divested of our international business, we moved out of a domestic merchant generation business in 2015, we’ve developed a gas portfolio business with the acquisition of Piedmont Natural Gas. So that’s been our strategy. It’s a portfolio transition.”
Duke Energy’s shares were trading at $79.10, up $2.32, or 3.02 percent in midday Thursday trading.
The company said it would expand its capital spending by 25 percent over the next five years to $37 billion to invest heavily in updating its grid by placing power lines underground and limiting outages due to storms. The company said it will also invest in “smart grid” improvements that use digital technology to give customers more information and options about their energy use.
“An emphasis on infrastructure build coming from this administration would be favorable in our view,” Young said. “We have investments in Atlantic Coast Pipeline, a very important pipeline, coming through the Carolinas and Virginia area.”
Duke owns a 47 percent stake in a company that will build and own a natural gas pipeline from West Virginia to eastern North Carolina. The company expects an environmental study of the Atlantic Coast Pipeline to be completed by late June, with federal approval 90 days later.
The company also has ownership interest in the Constitution Pipeline through New York state.
“We think these projects make so much sense for bringing low cost energy to customers, so we like to see those regulatory processes expedited and moved favorably. We’ve dealt with regulation very well at the state and at the federal level. We think that’s a core competency for us,” Young said.
Longer term, Duke also wants to nearly double its earnings from natural gas and plans to spend $11 billion on cleaner energy such as natural gas, solar and wind.
The Charlotte Observer reported Thursday that Duke received a construction and operating license for the Lee nuclear plant in South Carolina but hasn’t decided whether to build it. Cost overruns for two nuclear stations under construction in South Carolina and Georgia threaten to topple Japan’s Toshiba, which owns Westinghouse, designer of the reactors the plants will use.
