The leaders of Duke Energy Corp. have launched a series of cost-cutting moves in response to mild weather that depressed earnings in the first half of 2023. The moves are expected to save about $150 million by year’s end, about 0.7% of Duke’s total 2022 operating expenses, and are coming on top of $300 million worth of expense cuts Chair, President and CEO Lynn Good and CFO Brian Savoy put in place to begin the year.
Good and Savoy outlined the savings plan while reporting Duke’s second-quarter results, which showed a net loss of $234 million, versus a year-earlier profit of $893 million, on revenues of nearly $6.6 billion. (Adjusted for the planned sale of Duke’s commercial renewables group, earnings per share were 91 cents compared to $1.09 in the second quarter of 2022.) Savoy said the tactical decisions to trim O&M spending have focused on deferring non-critical work, cutting spending on various outside services and limiting employees’ non-essential travel and overtime.
“Cost management has become part of the Duke Energy DNA and continues to produce sustainable savings,” Savoy said on an Aug. 8 conference call with analysts. “We're leveraging digital innovation, data analytics and process improvements to increase efficiency, making targeted capital investments to reduce maintenance costs and reshaping our operations to streamline work and lower costs.”
Charlotte-based Duke grew its total retail customer count by 1.5% to more than 8.3 million in the 12 months ended June 30. Residential growth outpaced that total figure but Q2 weather-normalized sales to residential customers were down 1.9% from the year before. Savoy said part of that was weather-related but homes’ rising energy efficiency and more people’s return to office work also contributed. Industrial growth was hampered by some large customers showing caution, he added, even though the Duke team’s longer-term outlook for much of Duke’s service territory—which has attracted numerous automotive and other manufacturing projects in recent quarters—remains positive.
During the conference call, Good repeatedly emphasized that those growth projects as well as the pending disposition of the renewables business have put Duke on a clear path to consistent organic growth. Nevertheless, analysts lobbed a number of questions at her about possible acquisitions, including a rumored and reported one of Dominion Energy’s Public Service Co. of North Carolina unit.
”Our sole focus is on organic growth,” Good said. “Because when we look at what we have in front of us and our ability to drive growth with the capital plans that sit in our jurisdictions, we believe that we’ll deliver the greatest value to shareholders.”
Shares of Duke (Ticker: DUK) climbed nearly 3% to $92.13 on Aug. 8. Over the past six months, they’ve slipped a few percentage points, trimming the company’s market capitalization to about $71 billion.