DTE Energy (DTE) reported third quarter 2010 earnings of 96 cents per share, in line with the Zacks Consensus estimate. Results were ahead of 92 cents reported in the prior-year quarter. Net income in the quarter was $163 million, up 8% from $151 million reported in the third quarter of 2009.
Revenue of DTE Energy in the quarter under review was $2.14 billion, an increase of 10% from $1.95 billion in the third quarter of 2009. Revenue, however, fell short of the Zacks Consensus estimate of $2.29 billion.
Operating expenses increased 8% year over year to $1.75 billion in the third quarter. Higher fuel, purchased power and gas costs and operation and maintenance costs pushed the increase in the quarter
DTE Energy’s Operating income in third quarter of 2010 was $386 million, up 16% from $332 million in the prior-year quarter.
Segment Update
Electric Utility: Segment earnings were $165 million or 97 cents per share, up from $149 million or 91 cents in the prior year quarter.
Gas Utility: The segment posted a loss of $6 million or 4 cents per share, which narrowed from a loss of $23 million or 14 cents in third quarter 2009. Revision in rate order in June helped to narrow down the loss in the quarter.
Gas Storage and Pipelines: Segment profit declined slightly to $12 million or 7 cents per share form $13 million or 8 cents in the year-ago quarter
Unconventional Gas Production: Segment loss increased to $4 million or 2 cents per share from a loss of $2 million or 1 cent in third quarter of 2009.
Power and Industrial Projects: The segment posted a profit of $26 million or 15 cents per share, up from $10 million or 5 cents in the year-ago period. Increased coke sales and steel industry fuels production tax credits in 2010 helped the segment report a huge profit.
Energy Trading: The segment posted a loss of $12 million or 7 cents, compared with a profit of $6 million or 4 cents per share in the prior year quarter due to weak economic performance.
Corporate and Other: Operating loss in the quarter was $18 million or 10 cents per share, compared with a loss of $2 million or 1 cent in the prior year quarter. The prior-year quarter benefited from one-time tax benefits.
Full-Year 2010 Guidance
DTE Energy revised its guidance for operating earnings to a range of $3.50 to $3.70 per share, from $3.45 to $3.80 guided previously.
We expect a growing utility business coupled with beneficial regulatory policies in Michigan and higher rates to help DTE Energy post solid results in the upcoming quarters.
We remain “Neutral” on DTE Energy over the long term. The quantitative Zacks #3 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the stock over the near term.
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