How Does Duke Energy Spend Its Money?

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Duke Energy’s (NYSE: DUK) total expenses have increased from $20.2 billion in 2016 to $21.9 billion in 2018 (FY Ends December). As a % of Revenue, expenses have ranged from 87% to 89%. Duke’s Expenses are largely driven by Fuel and Natural Gas Expenses and Operations and Maintenance Expenses and together these expenses have remained relatively flat at about 57% of Revenues. However, the company’s Net Income Margins have declined from 11.3% in 2016 to 10.7% in 2018, as higher Depreciation & Amortization caused by higher amortization of deferred coal ash costs more than offset the benefits from the U.S. Corporate Tax Reforms. Below, we take a look at the key drivers of Duke Energy’s expenses and net margins.

View our interactive dashboard analysis on Duke Energy Expenses: How Does Duke Energy Spend Its Money?

Total Expenses

  • Duke Energy’s Total Expenses have increased from $20.2 billion in 2016 to $21.9 billion in 2018.
  • As a % of Revenues, Total expenses have increased from 89.0% in 2016 to about 89.4% in 2018.
  • Duke Energy’s Net Income Margins have declined slightly from 11.3% to 10.7% between 2016 and 2018, as benefits of the U.S. Corporate Tax Reforms were offset by higher D&A Expenses.

Breakdown of Duke Energy’s Total Expenses

Operating Expenses

Duke’s Operating Expenses increased from $17.5 billion in 2016 to $19.8 billion in 2018, Driven By (A) $600 Million increase in Fuel and Natural Gas expenses (B) $ 300 Million Increase In Operations & Maintenance & (C) $ 1.4 Billion Increase In D&A and Property Taxes.

(A) Fuel and Natural Gas Expenses have increased from $6.9 billion in 2016 to $7.5 billion in 2018, driven by higher average fuel prices. As a % of Revenue Fuel prices have increased marginally from 30.3% to 30.7%.

(B) Operating, Maintenance & Other Expenses have increased from $6.2 billion in 2016 to $6.5 billion in 2018. As a % of Revenue, the metric has declined from 27.4% to 26.4%.

(C) D&A Expenses have increased from $4.4 billion in 2016 to $5.8 billion in 2018, driven partly by higher Amortization of deferred coal ash costs. As a % of Revenues, the metric has increased from 19.5% to 23.8%.

Non-Operating Expense

  • Duke Energy’s Non-Operating Expense Has Increased From $1.47 billion in 2016 to $1.6 billion in 2018, due to higher interest expenses, although this is being partly offset by higher Other Income.

Income Tax Expense

  • Duke Energy’s Income Tax Expense has declined from $1.2 billion in 2016 to about $0.4 billion in 2018, Driven partly by the U.S. Federal Income Tax Reforms and Renewable energy production tax credits.

 

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