NextEra beats Q3 profit estimates on strength of renewables businesses

(Reuters) - NextEra Energy reported third-quarter profit that beat Wall Street estimates on Tuesday, on the back of higher retail sales at its utilities business and additional projects at its renewable energy units.

NextEra, which generates more wind and solar power than any other company in the world, has benefited from a clean energy investment push in the U.S. after the passage of the Inflation Reduction Act last year.

"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 in each year through 2026," NextEra CEO John Ketchum said.

Florida Power & Light, NextEra's regulated utilities business, added 65,000 more customers from a year earlier, indicating higher retail sales due to warmer weather in Florida.

NextEra Energy Resources, its clean energy unit, added nearly 3,245 megawatts of new renewable and storage projects, which now totals over 21 gigawatts, net of projects placed in service.

The firm's solar newbuilds are at a record level and wind newbuilds are close to an all-time high despite the increase in interest rates, Raymond James analyst Pavel Molchanov noted.

"We should underscore that the cost of capital is not the only variable that matters. Hardware costs have come down sharply, which helps to cancel out the effect of high interest rates," he said.

The parent company in its conference call announced it expects to transfer nearly $400 million in tax credits this year, and they are likely to grow to approximately $1.6 billion to $1.8 billion by 2026.

Shares of NextEra Energy were up 6.2% at $54.73 while those of Nextera Energy Partners jumped 13.51% to $25.45.

NextEra Energy Partners, a unit of the company created to acquire, manage and own contracted energy projects, saw growth in the third quarter primarily driven on new projects, and was focused on an annual growth rate averaging 6%.

In September, the unit cut its forecast from between 12% and 15% to between 5% to 8%.

There had been concerns ahead of the earnings call that increased competition and higher interest rates would hurt NextEra's renewable business, said Mike Doyle, utilities analyst at Edward Jones. "We really didn't see that in terms of record originations on the renewable side that increased their backlog of projects, which will be done in coming years," he said.

The utility business also continued to perform, said Doyle. "We think they will show some of the better growth among pure utilities in coming years."

The Juno Beach, Florida-based company said it expected adjusted earnings per share for 2023 to be in the range of $2.98-$3.13 against LSEG estimates of $3.12, and for 2024 to be in the $3.23-$3.43 range compared to $3.40, per LSEG data.

On an adjusted basis, the company earned 94 cents per share in the quarter, beating estimates of 87 cents, according to LSEG data.

(Reporting by Seher Dareen in Bengaluru and Nicole Jao in New York; Editing by Krishna Chandra Eluri and Sharon Singleton)