Duke Energy posts 2Q loss

Duke Energy posts 2Q loss

Duke Energy posts 2Q loss

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by CHRIS KAHN / Associated Press

Associated Press

Posted on August 3, 2010 at 8:18 AM

Updated Tuesday, Aug 3 at 2:17 PM

NEW YORK (AP) -- Duke Energy Corp. on Tuesday posted a second-quarter loss after booking $660 million in charges for writing down the value of its Midwest power plants.

But its adjusted earnings and revenue beat Wall Street expectations and the Charlotte, N.C., company is raising its earnings forecast for the year.

At the same time Duke, which serves about 4 million customers in five states, isn't expecting electricity demand to return to pre-recession levels anytime soon.

Duke reported a loss of $222 million, or 17 cents per share, for the three months ended June 30. That compares with net income of $276 million, or 21 cents per share, a year ago.

Excluding special items, Duke earned 34 cents per share. Analysts expected earnings of 28 cents per share.

Revenue increased 13 percent to $3.29 billion, above analysts expectations for $3.1 billion.

Duke increased its earnings forecast for the year to between $1.30 and $1.35 per share, excluding charges, up from $1.25 and $1.30 per share.

In taking a writedown for its Midwest power plants, Duke said they have declined in value because of lower power prices and the potential for tougher environmental regulations.

Duke Chief Financial Officer Lynn Good said the writedown follows the drop in coal prices during the past few years and the affect of relatively cheap natural gas on commodities markets.

"We'll see sustained lower power prices for a number of years," Good said in an interview with The Associated Press.

She said Duke's coal-burning units in Ohio could also be affected by new federal emissions regulations.

Economists look to power companies like Duke for a reading on the health of the U.S. economy. While Duke beat market expectations due to a hot summer and favorable foreign exchange rates, the pace of the economic recovery appears to be slowing down, Duke CEO James E. Rogers said.

Rogers told the AP it probably will take another four or five years before electricity sales to homes, businesses and manufacturers return to 2007 levels.

"Our economy is going to be pretty flat with modest growth ... and probably sustained unemployment during that period," Rogers said.

Duke's franchised electric and gas service, which serves customers in the Carolinas, Ohio, Kentucky and Indiana, reported pretax earnings of $671 million, up from $500 million in the year-ago quarter. Duke's international business, which provides electricity in Central and South America, reported pretax earnings of $126 million, up from $68 million.

Shares fell 3 cents to $17.34 in midday trading.

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