U.S. power producer NRG Energy missed Wall Street’s second-quarter earnings expectations after higher interest expenses and costs tied to recently acquired assets offset stronger operating performance.
The Houston, Texas-based company reported adjusted earnings of $1.49 per share for the three months ended June 30, below analysts’ average estimate of $1.70 per share, according to LSEG data.
Interest expenses more than doubled during the quarter, with losses rising to $310 million from $148 million a year earlier, reflecting the impact of elevated borrowing costs as interest rates remain higher for longer.
The company is also absorbing costs linked to its $12 billion acquisition of power generation assets from LS Power, announced in May, as it expands to meet rising electricity demand in the United States.
NRG’s Texas business recorded adjusted EBITDA of $381 million, down 25.6% from a year earlier due to higher supply costs and the effects of milder winter weather on demand.
By contrast, its East segment delivered a sharp increase in adjusted EBITDA to $469 million, supported by newly acquired generation assets, contributions from CPower and stronger capacity prices, despite weather-related supply costs.
Overall, adjusted EBITDA climbed to $1.21 billion, up from $909 million in the same quarter last year, highlighting growth in the company’s core operations.
NRG said the stronger operating performance was not enough to offset higher financing costs and acquisition-related expenses, which weighed on quarterly profitability.
The company continues to expand its generation portfolio as utilities position themselves for increasing electricity demand driven by data centres, electrification and economic growth.
NRG serves more than 7 million retail customers across 24 U.S. states, the District of Columbia and eight Canadian provinces.