(Reuters) -NextEra Energy on Wednesday reported a lower-than-expected profit in the second quarter, partly hurt by lower segment sales and higher interest rates.
The company, which operates renewables business NextEra Energy Resources and regulated electric utility Florida Power & Light (FPL), saw an 8.1% decline in revenue at its utility segment in the quarter, in part due to lower electricity rates.
FPL, one of the biggest power providers in the United States, had earlier forecast a drop in electricity bills from May onwards due to lower natgas prices.
But natgas prices rose during the quarter on higher demand forecasts as power generators burned more gas to keep air conditioners humming during a lingering heat wave. Electricity rates, however, did not rise in tandem.
Meanwhile, NextEra’s renewables business saw a nearly 35.6% drop in revenue, reasons for which were not provided by the company.
CEO John Ketchum instead said the segment saw the “second-best origination quarter ever, adding more than 3,000 megawatts of new renewables and storage projects to our backlog.”
NextEra’s overall revenue fell about 17% to $6.07 billion from a year earlier, and came below LSEG estimates of $7.36 billion, while adjusted profit of 96 cents per share also missed analysts’ expectation of 98 cents.
The U.S. Federal Reserve’s aggressive monetary policy tightening that started last year to curb inflation has weighed on the utilities sector, hurting investments and demand as the rate hikes make dividend-paying stocks such as REITs and utilities less attractive and drive up borrowing costs.
The Juno Beach, Florida-based company maintained its 2024 adjusted earnings forecast between $3.23 and $3.43 per share.
“We will be disappointed if we are not able to deliver financial results at or near the top of our adjusted earnings per share expectations ranges each year through 2027,” the company said.
Shares of NextEra were trading 1.5% higher at $73.24.
(Reporting by Seher Dareen in Bengaluru; Editing by Shinjini Ganguli)
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