Duke Energy’s Q2 2017 Earnings Review: Steady Customer Growth Drives Improvement In Results

by Trefis Team
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Duke Energy, the largest U.S. power company by generation capacity, reported an improvement in the operating performance of its three reporting segments. As a result of the divestment of its International Energy business and the acquisition of Piedmont Natural Gas last year, the company’s results in Q2 2017 are not directly comparable with those in the corresponding period of 2016. However, the improved operating performance of the company is evident from a near 7% year-over-year growth in net income attributable to the company’s three existing business segments to $782 million in Q2 2017. [1]

The improved segment results were driven by steady customer growth for both the Electric Utilities & Infrastructure and the Gas Utilities & Infrastructure segments. Steady economic growth, including a recovery in the housing market characterized by an increase in single-family housing construction, has driven the increase in the company’s customer base. [2] However, despite growth in the customer case, the rising energy efficiency of electricity appliances and building codes translated into a drop in actual units sold. In addition, the results of the Commercial Renewables segment benefited from new projects being brought on line in 2016.

Besides steady customer addition, the company’s grid modernization and cost reduction efforts continued to generate savings, which helped prop up results. Going forward, the company plans to continue to invest in grid modernization as well as the diversification of its generation portfolio, with an increasing share of generation from natural gas and renewables. The company is investing in expanding its natural gas pipeline infrastructure as well as ramping up the generation from renewables (as evident from the sharp growth in Q2 2017 renewables generation results). Thus, Duke Energy is transforming its traditional asset portfolio in order to capitalize on growth opportunities presented by gas and renewables. We will continue to track the gradual transformation of Duke Energy into a diversified utilities company.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Duke Energy
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Notes:
  1. Duke Energy’s Q2 2017 Earnings Release, SEC []
  2. Duke Energy’s Q2 2017 Earnings Call Transcript, Seeking Alpha []
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