Duke Energy hopes renewable biz sale makes stock more attractive
Duke Energy says it will go ahead with the sale of its commercial renewable energy business, after studying the idea since August. The Charlotte-based company thinks the spinoff will make its remaining regulated businesses more attractive to investors.
Besides selling electricity to consumers and businesses in the Southeast and Midwest, Duke also operates a nationwide division that owns solar and wind farms. The division sells energy to other utilities, businesses and institutions. But now it's getting out of that business.
Duke says it found a "competitive" group of potential buyers and expects to announce a sale in early 2023. Chief Financial Officer Brian Savoy said shedding the division would make it easier for investors to see profitability from big investment plans for its regulated consumer businesses in the Southeast and Midwest.
"What is different now than in the years prior (is) the transparency of the capital investment and the growth in front of us as a regulated utility," Savoy told WFAE.
"In the past, it's been more project-by-project. But having a holistic clean energy transition plan that totals 145 billion (dollars) over the next decade really fuels growth in a consistent way that investors can count on and customers can expect," he said.
Savoy wouldn't comment on the expected value of the division. He said Duke plans to use the money to pay off corporate debt. That would free up capital for future investments in the remaining consumer energy business.
Duke reported a profit of $1.38 billion for the three months that ended Sept. 30, up from $1.37 billion a year ago.
Earnings per share were $1.81. Excluding adjustments for previously discontinued operations, earnings per share were $1.78, down from $1.88 a year ago. Wall Street analysts expected $1.83 per share, according to Zacks Investment Research.
The company blamed the shortfall on several factors: fewer new projects coming online in the commercial renewables business because of difficulty getting solar panels, lower investment returns and higher interest expenses.
But revenues were higher than expected, at $7.97 billion, up from $7 billion a year earlier.
Duke told investors it expects profits to grow 5% to 7% in 2023, to between $5.55 and $5.75 per share. That excludes the commercial renewables business being sold.
"We remain on track to deliver strong results from our regulated utilities in 2022, while advancing our clean energy transition and continuing to deliver exceptional value to our customers, stakeholders and investors," CEO Lynn Good said in a press release.
"We're encouraged by the market response to our commercial renewable business and will proceed with a sale targeting a second-quarter 2023 closing."
See Duke's full release at https://investors.duke-energy.com/