Duke Energy may sell international business

Duke Energy says it may sell some or all of its volatile international business, which owns power plants in Central and South America but has hurt overall earnings in recent quarters.

Duke said Thursday a potential sale is at a preliminary stage and no offers for the Houston-based business have been sought or submitted. It has 850 employees.

“No assurance can be given that any process, if ultimately started, will result in a transaction,” the company added.

Duke said it will provide any updates during its Feb. 18 earnings call.

The international business had been a drag on Duke’s business in 2015. Third-quarter earnings, reported in November, were down 27 percent from the previous year in part of because of weaker performance from international.

Income from the unit, which makes up about 10 percent of the company’s business, was $69 million for the third quarter, down from $80 million in the same period a year ago.

A long drought in Brazil, weak economies and unfavorable currency exchange rates have hammered the unit. But Duke decided a year ago, after a strategic review, to hold on to the business and in November said it expected profits to stabilize in 2016.

“We certainly learned a lot this year with the extraordinary amount of volatility that international has exhibited,” chairman and CEO Lynn Good said in November. “Volatility is not something that is a great fit for Duke, if you look at the level of dividend we pay. There are no specific plans that I would share but we continue to look at our portfolio.”

Chief financial officer Steve Young told SNL Energy in November that Duke expected the water issues that have plagued its Brazil operations to improve. Young said then that Duke felt the international business had stabilized, but at a lower level than previously.

“It used to be a business that earned about 60 cents per year (in earnings per share) and it had done that for several years,” he said. “It's dropped now to in the neighborhood of 30 cents and we think that’s the bottom level.”

Two-thirds of the 4,400 megawatts of generating capacity Duke owns in Argentina, Brazil, Chile, Ecuador, El Salvador, Guatemala and Peru are hydroelectric plants. Half are in Brazil.

Duke’s 25 percent stake in National Methanol Co., a Saudi Arabian producer of methanol and the gasoline additive MTBE, would not be included in a sale.

Duke said it made its comments Thursday after a required statement released by its Brazilian subsidiary, which is publicly traded in Brazil. The filing in Brazil followed a report on a potential sale by an energy financing and trading news service.

This story was originally published February 4, 2016 at 7:50 AM with the headline "Duke Energy may sell international business."