NEW YORK — Duke Energy's net income rose 69 percent on lower merger costs, but the company's results were still weaker than investors had hoped as milder summer weather reduced electricity demand.
Duke posted third quarter net income of $1 billion on revenue of $6.71 billion Wednesday. That's compared with net income of $594 million on revenue of $6.72 billion last year.
The company earned $1.42 per share. Adjusted to remove the effects of one-time costs, it earned $1.46 per share. That's a penny below last year's adjusted results, and a nickel below what analysts surveyed by FactSet had expected on average.
In last year's third quarter, Duke incurred $630 million in costs associated with its merger with Progress Energy and cost overruns at a new coal plant in Indiana. In this year's third quarter, merger costs were $88 million.
Duke CEO Lynn Good said in an interview Wednesday that adjusted earnings were lower than last year because mild weather, which lessened the need for customers to crank up their air conditioners, reduced earnings per share by 11 cents.
"It was a really mild period for us, particularly in the Carolinas," she said.
Duke Energy Corp., based in Charlotte, is the nation's largest electric utility by market value and number of customers. It serves 7.2 million customers in North Carolina, South Carolina, Florida, Indiana, Ohio and Kentucky.
Electricity sales grew modestly when adjusted to remove the effect of weather. Investors and analysts closely study weather-adjusted electricity sales to get a sense of underlying demand for power.
Good said industrial demand for power grew 3 percent in the quarter, spurred by increased demand from automotive and housing and construction customers. Overall demand grew 1.7 percent, she said.
Duke's results were helped by regulatory approval for higher rates in North Carolina, South Carolina and Ohio. But the new rates didn't go into full effect until September, the last month of the quarter, so the revenue boost was modest.
Good said Duke's fourth-quarter results will fully reflect those higher rates, which are expected to increase Duke revenue by $600 million a year.
"We expect a very strong fourth quarter," she said. Good increased the lower end of the company's expected earnings to $4.25 per share from $4.20 per share. The upper end of the range remained at $4.45.
Andy Smith, an analyst at Edward Jones, was pleased to see strong weather-adjusted sales and solid cost controls.
"They've executed on all the objectives they've set out," he said.
He does not expect that the company's lower-than-expected earnings will rattle investors because Duke is poised for better results in the fourth quarter.
"For their sake, they'd better hit that," he said.
Jonathan Fahey can be reached at http://twitter.com/JonathanFahey .