Vistra quarterly profit slips on hedging losses despite strong power demand (updated)
UPDATE 1-Vistra quarterly profit slips on hedging losses despite strong power demand Adds details from conference call in bullets 1 to 4
By Varun Sahay
Aug 7 (Reuters) - Vistra Corp VST.N reported a slight decline in second-quarter profit on Friday, as unrealized losses on commodity hedges outweighed strong growth in its power generation business amid periods of extreme heat in some of its markets.
While independent power producers benefit from stronger power demand during hot periods, higher operating costs and volatile mark-to-market adjustments on hedging contracts can pressure earnings.
Power market prices remained below levels needed for new generation build projects to earn adequate returns, the company's executives said on a conference call.
Vistra does not support "bring your own new capacity" mandates and favors incentive-based approaches, they added.
Vistra committed up to $1 billion to Helix Digital Infrastructure, an AI infrastructure venture launched in June by a KKR-led KKR.N consortium with more than $10 billion in committed capital and backing from Nvidia NVDA.O and the Kuwait Investment Authority.
It said it could invest an additional $500 million in the Helix partnership if certain milestones are met.
Vistra incurred an unrealized loss of $472 million during the second quarter from hedges expected to settle in future years.
Quarterly interest expenses and related charges rose 3% from a year earlier to $312 million, while operating costs increased 16.4% to $853 million.
The Irving, Texas-based power company's quarterly net income fell 6.7% to $305 million from a year earlier, though adjusted core profit rose 31% to $1.77 billion driven by higher realized energy and capacity prices and contributions from plants acquired from Lotus.
Vistra also said it received Federal Energy Regulatory Commission (FERC) approval for its pending acquisition of Cogentrix Energy.
(Reporting by Varun Sahay in Bengaluru; Editing by Jonathan Ananda)