NRG Energy reported a $6.4 billion quarterly loss on Monday primarily from write downs, including the loss of value of its struggling Texas coal plants.
NRG, which is carrying out a restructuring under a new CEO, said Monday it’s slashing its dividend nearly 80 percent.
NRG also still plans to spin off or sell much of its stake in its home solar and electric vehicle charging businesses in the spring as previously planned.
Longtime CEO David Crane was pushed out in December amid investor concerns over the company being too complicated and too focused on solar businesses that were not yet profitable. The chief operating officer, Mauricio Gutierrez, took over as president and CEO at that time.
“I am here to tell you the simplification of our business is an imperative,” Gutierrez said Monday, adding that NRG is focusing on its power generation and its thriving retail electricity businesses.
NRG posted a net loss of $6.4 billion, down from a $97 million profit from the same time a year ago. For the year, NRG had $6.44 billion loss, compared to a $132 million net gain in 2014. NRG’s losses were primarily driven by more than $5 billion in impairment charges.
NRG said it’s cutting its dividend nearly 80 percent from 58 cents to 12 cents a share to reallocate about $145 million annually for capital spending and debt reduction.
NRG will reincorporate its NRG Renew solar business for commercial and industrial customers back into NRG, which shows NRG is not abandoning renewables, Gutierrez said.
However, NRG still plans to unload much of its home solar and electric vehicle charging businesses in the second quarter, he said.
The power sector is depressed overall from natural gas prices near historic lows and NRG’s disadvantaged coal plants are suffering. NRG executives particularly referenced the company’s two, big Texas coal plants: the WA Parish plant southwest of Houston and Limestone plant in Jewett, which is east of Waco.
The Electric Reliability Council of Texas last yer identified the Limestone plant as one of a handful Texas plants that could be shuttered in the coming years because of anticipated upgrade costs.
Gutierrez on Monday said such a shutdown is possible, but he said he expects the market to rebound before such action is needed.
“Right now, still not the time,” he said.
Gutierrez said the Texas market is “very disappointing” for now, although he sees “strong fundamentals” long term.
Although NRG suffered a big financial loss, Gutierrez pointed to the company’s operating performance for the quarter of $625 million, down from $661 million, as estimated by earnings before interest, taxes, depreciation and amortization, called EBITDA.
He said such operations shows that NRG is still operating very efficiently and poised to rebound strongly as the market recovers.
The focus will remain on cost cutting, debt reduction and some asset sales moving forward, he said.
“We are in a period of stay-low natural gas prices,” he said.
NRG’s stock value traded as high as $37 a share as recently as mid-2014, but closed last week at $10.90 a share.