Quitting Pipeline Project Leads Duke Energy To Quarterly Loss
Duke Energy lost $817 million in the second quarter as it wrote off $2 billion in costs related to the shutdown of the Atlantic Coast Pipeline project.
That was down from a profit of $820 million in the same period a year ago.
The company also cut $170 million in expenses to adjust to reduced energy demand amid the coronavirus pandemic. That came by trimming contractors, reducing overtime, adjusting the timing of lanned power plant outages, and cutting technology and other costs. And it came without layoffs of permanent staff, chief financial officer Steve Young told WFAE.
"We have not laid anybody off, and it's our goal to not do this," Young said.
He said instead of filling budgeted positions with new hires from outside the company Duke is moving employees to new areas.
"For example, we retrained many of our IT employees to move into other areas such as cybersecurity," he said. "We've moved some finance employees over to audit services to handle some emergent work. So they may move back to their original areas when the work is completed."
Duke lost $1.13 per share. But adjusted for the pipeline and other one-time expenses, earnings per share were $1.08. That was 4 cents better than the consensus estimate of analysts surveyed by Zacks Investment Research.
The nation's largest electric utility by customers reported revenue of $5.42 billion in the quarter, down from $5.9 billion a year ago. Most of that was the result of lower electricity sales. But Young said demand did not fall as much as Duke expected.
"We had expected in the second quarter that energy sales were going to be far lower than what we had seen in the second quarter the previous year," he said. "We thought they might be about 9% lower. They in fact turned out to be about 6% lower, which is good news."
Young also said commercial energy demand appears to be rebounding.
"We're seeing that about 75% of our large commercial and industrial customers are back in operations at some level. And that's been increasing and ramping up since mid-May," Young said. "So, that's good news on that front."
Duke says it expects residential and business energy sales to be down 3% to 5% overall this year.
Duke and partner Dominion Energy announced July 5 that they were canceling the 600-mile gas pipeline amid rising costs and years of legal and environmental delays.
Duke told investors it still expects full-year earnings to be in the range of $5.05 to $5.45 per share. That's unchanged from the first quarter as the pandemic began.
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