Duke Energy missed analysts earnings estimates for the fourth quarter and full year, posting earnings per share (EPS) of 35 cents and $2.64, respectively, compared to average Wall Street consensus estimates of 45 cents for the fourth quarter and $2.74 for the year. In 4Q2000, the company posted EPS of 47 cents and for the full year it posted $2.10.

Lower commodity prices hindered growth in Duke’s field services operations and mild weather hurt results from the company’s North Carolina utility company. Based on the results, Credit Suisse First Boston analyst Curt Launer said he was lowering expectations for this year from $2.85 to $2.75/share. Duke’s stock price was down nearly 3% by mid-day Thursday.

However, Duke’s marketing and merchant power operations performed well and are expected to showed continued strong growth this year. In addition, the company is buying Canadian pipeline giant Westcoast Energy.

CEO Richard Priory was upbeat about the company’s performance. “Despite all of the turbulence in the industry, it was our best year ever,” said Priory, noting a 26% increase in ongoing earnings per share before special charges in 2001. Non-recurring items, however, brought earnings per share gains down to only 2.5%, and the company’s fourth quarter was particularly difficult with diluted earnings per share after special items down 26% to 28 cents.

Priory said the company’s balanced energy portfolio led to full-year improvements. Marketing and trading operations, merchant power and Duke’s other unregulated businesses showed earnings growth of 127%.

Before special items, the company posted record earnings of $2.64/share compared to $2.10 in 2000, but short of the $2.74 average of analysts’ estimates. Including non-recurring items, Duke posted $2.45/share in 2001 compared to $2.39 in 2000. Net income for the year rose to $1.9 billion from $1.8 billion in 2000. Revenues for 2001 grew 21% to $60 billion. Fourth quarter net income fell to $225 million from $284 million.

“In 2001, we invested in regional growth opportunities in both power and natural gas, bolstering our presence in key energy markets and our position as a leading wholesale energy producer and trader. We are positioned for growth in 2002 at the high-end of our stated guidance for 10-15% annual EPS growth from a 2000 base of $2.10,” said Priory

Non-recurring items in 2001 included a $96 million charge for FAS 133, a $43 million charge for Enron exposure and $36 million charge for unbilled revenue receivables at Duke Power. In 2000, non recurring items included $54 million gain for selling two LNG vessels, $407 million gain on the sale of wireless telecommunications, and a $110 million charge against received balances for power sales in California.

For 2001, the company’s Energy Services businesses, which include North American Wholesale Energy (NAWE), International Energy and Other Energy Services segments, delivered combined EBIT of $1.6 billion for the year, a 127% increase over 2000. These results were driven by the expansion of the merchant plant portfolio as well as gains in marketing and trading.

The year’s gains were led by NAWE, which includes Duke Energy North America’s subsidiaries Duke Energy Trading & Marketing and Duke Energy Merchants. NAWE more than tripled its EBIT to $1.4 billion in 2001, from $434 million in 2000. DENA now has 14,800 MW of merchant power in operation or under construction compared to 9,000 MW in operation or under construction at the end of 2000. DENA has 11 facilities scheduled to begin commercial operation in 2002, totaling 6,600 MW.

Duke Energy International reported EBIT of $286 million in 2001, essentially flat. The Natural Gas Transmission segment reported an 8% increase in EBIT. The Field Services business segment, which represents Duke Energy’s majority interest in Duke Energy Field Services (DEFS), reported EBIT of $336 million in 2001, an 8% increase over 2000, despite a 34% drop in EBIT in the fourth quarter.

Duke North Carolina electric utility company, Duke Power and Electric Transmission, reported EBIT of $1.6 billion in 2001, compared to EBIT of $1.8 billion in 2000 and had a 41% drop in EBIT in the fourth quarter because of milder weather, the impact of a slowing economy on sales to industrial customers and the refinement of estimating factors used to calculate unbilled kilowatt-hour sales.

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