Duke Energy Misses Earnings Forecast as Higher Interest Rates Bite

U.S. utility giant Duke Energy (NYSE: DUK) reported on Thursday underwhelming fourth-quarter earnings below analyst expectations as rising interest rates raised costs for utilities.

Duke Energy booked adjusted earnings per share (EPS) of $1.51 for the fourth quarter, compared to $1.11 for the fourth quarter of 2022. Higher adjusted results for the quarter compared to last year were driven by lower O&M expense, favorable rate case impacts along with growth from riders and other retail margin, and lower tax expense and franchise tax benefits, partially offset by higher interest expense and depreciation on a growing asset base, the company said.    

Despite the higher Q4 EPS, the earnings missed the average analyst forecast of $1.54 per share, according to data from LSEG.

Interest expense in the Electric Utilities and Infrastructure division rose to $486 million for the fourth quarter 2023, up from $421 million for the same period of 2022.   

North Carolina-based Duke Energy – which serves 8.2 million electric utility customers in North Carolina, South Carolina, Florida, Indiana, Ohio, and Kentucky – said that its full-year EPS were adversely affected by higher interest expense, among other factors such as depreciation on a growing asset base along with unfavorable weather and electric volumes.

The company is raising its five-year capital expenditure plan by $8 billion—to $73 billion from $65 billion previously as it looks to incorporate more renewable energy in its resource base.

“Today we announced strong fourth-quarter results, concluding a year of resilience and agility as we overcame external challenges,” said Lynn Good, Duke Energy chair, president and chief executive officer.

“We enter 2024 with a clear vision, significant momentum and an increased $73 billion, five-year capital plan that will support our energy transition and the unprecedented growth of our jurisdictions,” Good said.

“The strength of our regulated utilities and our increasing capital profile give us confidence in our ability to deliver sustainable value and earnings growth of 5% to 7% through 2028.”

By Charles Kennedy for Oilprice.com

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