Duke Energy’s $1.2 billion sale of Australian energy assets in March enabled the company to post a 48% increase in first quarter net income to $334 million, or 36 cents/share, but excluding one-time charges, earnings fell to 32 cents/share from 42 cents/share in 1Q2003, and missed Wall Street estimates of 37 cents/share. Duke shares were down 4% Thursday following the announcement to $20.98/share.

“We have made exceptional progress in executing our 2004 business and financial plan,” said CEO Paul Anderson. “By closing the sale of our Australian assets, we have already met our asset sales target of $1.5 billion for 2004.” Duke sold its Australian gas pipeline and power generation assets in March to Australian combination utility company Alinta Ltd.

“Overall, ongoing earnings were in line with our expectations except for DENA, which was affected by mark-to-market losses,” he said. “Thanks to our asset sales and continued solid earnings and cash flow from our franchised electric and natural gas pipeline businesses, Duke Energy’s financial strength and flexibility are rapidly improving. As a result, our key businesses are positioned to selectively pursue growth opportunities.”

Duke’s electric utility operation, Duke Power, reported earnings before interest and taxes (EBIT) of $424 million, compared to the first quarter of 2003 EBIT of $454 million. The decrease was driven primarily by reduced wholesale power sales and additional costs for planned nuclear outages compared to the previous year’s quarter.

Duke Energy Gas Transmission (DEGT) reported a sharp drop in EBIT for the quarter to $398 million compared to $423 million in the prior year’s quarter mainly because of gains of $16 million from asset sales recorded in the prior year’s quarter, and foregone earnings of $17 million in this year’s quarter from various assets sold during 2003. Excluding the one-time amounts, EBIT increased $8 million.

Duke’s field services business reported a 200% increase in quarterly EBIT to $92 million from continuing operations, compared to $30 million, due to the favorable effects of commodity prices, net of hedging, compared to last year’s quarter and improved results from trading and marketing activities.

Duke Energy North America (DENA), however, reported an operating loss of $521 million, compared to EBIT of $23 million in the prior year’s quarter, because of an additional $325 million non-cash loss associated with the anticipated sale of DENA’s southeast U.S. power plants and a mark-to-market loss of $93 million taken during the quarter as a result of changes in power and gas prices.

Duke’s international business reported EBIT from continuing operations of $29 million, compared to $40 million in the first quarter of 2003. And Crescent Resources, Duke’s real estate company, reported EBIT from continuing operations of $60 million versus a break-even first quarter 2003.

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