DTE Energy Co. officials Monday said they expect continued economic weakness next year and forecast income from merchant energy sales and from utility sales to industrial customers will weaken.

DTE cut its earnings target in 2002 to $4/share from $4.10-$4.20/share. Company executives said the expected dip is split evenly between lower sales for the merchant energy group and a decrease in utility load.

Growth in merchant energy income will soften next year to $5-$10 million income, compared to a previously expected growth of $10-$15 million, the company said.

In mid-morning trading on the New York Stock Exchange, the stock was up at $42/share, from $41.78.

DTE reported 2001 third quarter earnings of $63 million on $2.1 billion of revenue, down from income of $104 million on $1.5 billion of revenue for the comparable period last year. The weak quarter was attributed to restructuring charges related to its merger with MCN Energy and also recessionary pressures on industrial electricity sales.

Analysts polled by were projecting 2001 earnings of $3.38-$3.65/share, with an average estimate of $3.53, according to research firm Thomson Financial/First Call. For 2002, they projected profits of $3.95-$4.26/share, with the consensus of $4.15.

“During the third quarter we began to see the impact of today’s economic downturn on our business, particularly on lower electric sales to industrial customers,” said Anthony Earley, CEO.

The regulated utility realized lower electric revenues because of a legislatively mandated rate reduction for commercial and industrial customers. Also, operating costs were up because of because of maintenance work on the power generation fleet to improve reliability, the company said.

Offsetting these decreases were increased residential sales of electricity and lower power supply costs.

“Despite the tough economic climate, DTE Energy was able to achieve its earnings target for the third quarter, and we’re committed to reaching our 2001 operating earnings goal of at least $3.50/share,” said Earley.

“It’s difficult to predict the length or severity of this economic downturn. Despite that, 2002 still represents a substantial year over year earnings growth,” Earley said.