Duke sees industrial sector stabilization after big Q3 sales increase

Options Toolbox

Search Breaking News Blog

Comments No Comments have been posted about this item. If you are a subscriber to SNL Interactive, please login to post a comment to this blog. If you do not subscribe to this service and would like to begin a free trial, click here. Comment Policy

About Breaking News Blog SNL writers and editors blog major breaking news events as they happen.

Duke Energy Corp. CFO Lynn Good said Oct. 30 that the company saw a distinct turnaround in industrial sales from the second quarter to third quarter of 2009 and now believes the troubled sector has reached a level of stabilization going forward.

Good said Duke is not yet ready to predict if the strong sales growth seen in the third quarter can continue or estimate the timing of a sustained resurgence for the industrial sector. However, Duke's industrial customers have generally told the company they feel much more positive about their prospects moving forward than they did in July. Many customers are planning to increase output, while many others are planning to keep output levels the same for the rest of 2009, Good said during the company's third-quarter earnings call.

Overall, industrial sales in the third quarter jumped 11% over second-quarter levels, buoyed by major demand increases from the three largest sectors of industrial customers in Duke's territories — primary metals, textiles and chemicals.

In general, sales to primary metals, textiles, chemicals and the total industrial-customers group, returned to fourth-quarter 2008 levels in the third quarter, Duke reported in its quarterly earnings presentation. Industrial sales in the fourth quarter of 2008 suffered a massive drop off from third-quarter 2008 levels as the U.S. recession took hold.

Among other customer classes, Good said Duke's residential sales in the third quarter of 2009 were up 2% over third-quarter 2008 levels and commercial sales were slightly negative. Total sales volumes for all classes were down 3% from the third quarter of 2008, Good said.

Duke's Carolinas customer base experienced a moderate increase over third-quarter 2008 levels, while customers in the Midwest have decreased slightly, but Good said customer growth rates in both service areas are worse than they have been in previous periods.

Overall, Duke believes weather-adjusted sales volumes in the fourth quarter of 2009 will be about equal to fourth-quarter 2008 volumes.