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Supply Snags, Coal Costs to Pressure NRG Earnings Into Next Year

Supply Snags, Coal Costs to Pressure NRG Earnings Into Next Year

Independent power producer NRG Energy Inc. expects earnings to slip next year due to “unprecedented” supply-chain constraints and mounting coal costs.

“Our platform is navigating the unprecedented supply chain constraints,” Chief Executive Officer Mauricio Gutierrez said Thursday during the company’s third-quarter earnings call, adding that those “unanticipated” issues will impact results for both the fourth quarter and into next year.

NRG said it now expects this year’s earnings to be between $2.4 billion and $2.5 billion before interest, taxes, depreciation and amortization, and the company initiated guidance for next year, with expectations of $1.95 billion to $2.25 billion on that adjusted measure, the company said in its earnings statement.

Shares fell 7.1% to $37.16 at 9:36 a.m. trading in New York, its biggest decline since mid-March.

NRG seeks to mitigate a $100 million impact from coal supply chain costs on its projected earnings in 2022, of which 60% is tied to its Texas generation and the rest is for its eastern U.S. plants, the Houston-based company said in a slide presentation.

The company said it’s also seeing chemical supply chain constraints across its generation fleet. NRG’s coal generation on the largest U.S. grid, PJM Interconnection in the East, was impacted by supply constraints for chemicals needed for environmental controls, Chief Financial Officer Alberto Fornaro said during Thursday’s call.

©2021 Bloomberg L.P.