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Utilities Expect a Subdued 1Q16, and Duke Energy Is No Exception

Can Leaving Latin America Energize Utility Giant Duke Energy?

Duke Energy: Expect lower revenues than 1Q15

Duke Energy (DUK), North America’s biggest utility by market capitalization, will report its 1Q16 results on May 3, 2016. According to Wall Street analysts, Duke Energy is estimated to report revenues of $6 billion this quarter.

In the last seven consecutive quarters, Duke Energy has missed analysts’ revenue estimates. In the same period last year, Duke reported revenues of $6.3 billion.

Revenue drivers

Duke Energy continues to expect flattish retail load growth of 0.6% in 2016. In the last four years, Duke Energy experienced retail load growth of similar levels. However, revenues may be on the higher side due to an expected customer base growth of 1.3% this year. Duke Energy’s revenues in 1Q16 are also expected to benefit from an extra day due to the leap year.

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Duke Energy: Divesting Latin American Generation segment

Duke Energy (DUK) is still pursuing divestment of its International Generation segment in Latin America (ILF). The segment consists of 3,000 megawatts of hydro and 1,325 megawatts of thermal generation facilities, and it has been a drag on Duke Energy’s performance. We will discuss this more in the coming parts of the series.

Last year, Duke Energy sold its Midwest Merchant Generation segment to Dynegy (DYN). Many utilities are trying to reduce their exposure to the less-stable merchant generation and enhance regulated operations.

PPL Corporation (PPL) divested its Merchant Power Generation segment last year and created Talen Energy (TLN). American Electric Power (AEP) is currently considering whether it should divest its Merchant Generation business.

Continue to Next Part

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