Shares of South Dakota utility company Black Hills Corp. (BKH -0.43%) fell as much as 15% in trading on Wednesday after reporting fourth-quarter 2022 financial results. Shares gained back some of those losses late in the day but were still down 9.3% to close trading.
Electric utility margin rose from $195.4 million a year ago to $230.6 million, but fuel costs offset most of those gains. Operating income for electric utilities only increased $5.8 million to $48.8 million.
Gas utilities fared better with operating income increasing $10 million to $81.8 million in the quarter. Overall, net income rose from $71.2 million a year ago to $72.5 million, or $1.11 per share. Investors were expecting $1.16 per share in earnings, and that's where the stock's drop comes from today.
Cost pressures will continue in 2023 as well. Management said they expect 2023 earnings to be $3.65 to $3.85 per share, down from $3.97 in 2022. And analysts were expecting $4.11 per share in earnings.
The utility business has gotten harder for a number of reasons over the last year. One is rising fuel and labor costs, which can often be passed on to consumers. But higher interest rates have impacted net income as well, and that pressure won't subside.