By Pooja Menon
(Reuters) -U.S. electric and gas utility CMS Energy reported a drop in its fourth-quarter profit on Thursday due to higher operating expenses, and warned of supply chain issues arising from potential tariffs.
U.S. natural gas futures rose 44.5% in 2024, resulting in higher operating costs for utilities like CMS Energy.
The utility also said it faces a “bumped up” supply chain situation and is looking to “migrate” to domestic vendors to cope with the potential tariffs, which were initiated and later paused by U.S. President Donald Trump on Canada and Mexico.
The company in 2024 sourced about 6% of its natural gas supply from Canada.
CMS’s interest charges in the quarter rose 4.5% to $180 million from the previous year, as a higher-for-longer interest rate environment has pushed borrowing costs for utilities that typically incur major capital expenditures.
Mild temperatures in service areas during the reporting period also hurt the demand for natural gas and electricity, the company said in a conference call.
Total operating expenses for the fourth quarter rose to $1.56 billion from $1.54 billion in the year-ago period, the company said.
Its revenue rose 2% from a year earlier to $1.99 billion in the quarter ended December 31, but missed analysts’ average estimate of $2.22 billion, according to LSEG data.
CMS Energy raised its 2025 forecast for adjusted earnings to between $3.54 and $3.60 per share, versus $3.52 to $3.58 previously. Analysts had estimated them at $3.59 per share.
The utility firm also increased its annual dividend by 11 cents to $2.17 per share.
The Jackson, Michigan-based firm said net income available to common stockholders fell to $262 million or 87 cents per share in the fourth quarter, from $306 million or $1.05 per share in the same period last year.
(Reporting by Pooja Menon in Bengaluru; Editing by Milla Nissi and Vijay Kishore)
