Duke's Diversity Yields Better Earnings
Duke Energy credited a diverse portfolio for insulating it from
the energy industry's downturn. The company reported 1998 third
quarter basic earnings of $1.18/share, up 42% from 83 cents/share
for the same quarter in 1997. Duke posted earnings of $423.8
million for the third quarter, compared to $298.4 million for the
same quarter in 1997. Overall earnings before interest and taxes
(EBIT) for the third quarter of 1998 was $870.9 million versus
$632.2 million for the third quarter of 1997.
The company cited two main factors for the increase. In Electric
Operations, overall electric sales rose 7.8%. In Energy Services,
EBIT rose 110% from last year's quarter. In that unit, improved
results from Duke Energy's Global Asset Development and Duke Energy
Trading and Marketing more than offset lower margins posted by Duke
Energy Field Services due to lower natural gas liquids prices.
"During the third quarter, we continued to execute our strategy
to develop regional centers of energy assets. We also leveraged
Duke Energy's strong, diverse portfolio of assets," said Richard B.
Priory, CEO. "In the energy business, many external forces can
affect revenues. The diversity of our portfolio provides some
offsets so that negative factors for one line of business can be
positive for another."
EBIT at Duke's gas transmission operations rose 32% to $177.7
million, versus $134.6 million for last year's quarter. Earnings
were affected by the resolution of Texas Eastern Transmission's gas
supply realignment costs, which added $39 million to third quarter
results. Also in the quarter, Texas Eastern received approval from
the Federal Energy Regulatory Commission for its Customer Rate
Initiative plan that will reduce customer rates and will make the
pipeline more competitive in the future. "With these legal and
regulatory issues behind us in our Natural Gas Transmission area,
we can now focus our total efforts on providing better results to
customers and shareholders," said Priory.
In Energy Services, EBIT for the quarter was $78.8 million
compared to $37.5 million reported for last year's quarter.
Although lower gas liquids prices resulted in lower margins for
Duke Field Services, other business units showed better results.
In Electric Operations, warm summer weather led to an increase
of overall electric sales. Sales to residential customers accounted
for much of the increase, rising 13% for the quarter. Commercial
and general service usage rose 8%. Industrial sales fell 1.8% for
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