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Duke Energy Earnings Miss Estimates, Fall 26%

Duke Energy reported a 26% drop in ongoing earnings per share to 31 cents for the second quarter compared with 42 cents in the same period last year and missed analysts' estimates by about 7 cents/share. The company attributed the decline mainly to mild weather and higher expenses, which led to lower earnings from its franchised electric utility business and its gas transportation operations. Its wholesale energy merchant unit also posted a larger loss for the quarter.

Duke's net income fell 28% to $309 million (33 cents/share) compared to $432 million (46 cents/share) in 2Q2004.

"Thanks to a strong performance from field services and international, our results are on plan with respect to where we thought we would be at this point in the year," said CEO Paul Anderson. "Mild weather hurt sales at our merchant and regulated electric businesses this quarter, but we remain confident that we will be able to achieve our 2005 EPS incentive of $1.60 per share."

Anderson said the hot weather this summer likely will lead to improvements in the third quarter for utility Duke Power and merchant energy unit Duke Energy North America. Duke's real estate business, Crescent, also is expected to show improvements by the end of the year. Anderson said Duke's international unit is expected to have "an exceptional year."

The following are the earnings before interest and taxes (2Q2005 compared to 2Q2004) from each of Duke's business segments: franchised electric, $274 million compared to $338 million; Duke Energy Gas Transmission, $302 million compared to $311 million (ongoing annual EBIT growth expected to be 3-5%); Field Services, $166 million compared to $95 million; Duke Energy North America, loss of $56 million compared to a loss of $38 million; Duke Energy International (DEI), $86 million compared to $68 million; Crescent Resources, $39 million compared to $87 million.

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