The investor's view
+4.8%
growth in revenue a year, FY2020 to FY2025
- Five fundamentals, each ranked against the all covered companies
- A peer map of growth against margin
- Where the profit is made
Markets, not new contracts, widened the margin
Q2 FY2026, the quarter to Jun 30, 2026 · 10-Q filed Aug 4, 2026
Largest source of revenue: Electricity, Generation, 70.9% of the total.
Operating margin jumped 52.8%, and the filing credits mostly derivatives, development fees and spot prices, items that do not arrive on a schedule.
Operating margin, which AES defines as revenue less cost of sales, was $692M against $453M a year earlier: 20.2% of revenue against 15.9%. Revenue rose 19.9% while cost of sales rose 13.7%. Non-regulated sales, the generation side, grew 26.3% to $2.43B, while regulated utility sales grew 6.7% to $995M.1
The filing attributes most of the gain to the Renewables segment, from favourable U.S. energy derivatives and U.S. development services, and to Energy Infrastructure, from higher spot energy and capacity sales and prices, chiefly in Argentina. In Colombia, El Niño lifted spot prices. Against this, the Maritza power purchase agreement in Bulgaria expired, cutting contract sales, and depreciation rose.1
The new fleet did less of the work this time. In explaining net income attributable to AES, the filing lists lower contributions from renewables projects placed in service among the offsets, and it says capitalised interest fell because fewer projects are under construction.1
AnalysisAnalysis: mark-to-market derivative gains, development fees and weather-driven spot prices can fade or reverse. For a 20.2% margin to hold, contracted margin from plants placed in service would need to grow into the space these items fill now.
The wider margin cut interest's share from 77.7% a year earlier, but lenders remain the first claim on what the plants earn.
Interest expense was $368M against operating margin of $692M, or 53.2%. A year earlier it was $352M against $453M, or 77.7%. Interest income of $65M offsets a small part. Operating margin is already measured after depreciation, which AES includes in cost of sales.1
The filing says interest expense rose because of higher debt balances and lower capitalised interest at Renewables, with fewer projects under construction, and a higher average rate and debt balance at the Parent Company, partly offset by lower debt at Energy Infrastructure. In its words, 'We rely mainly on long-term debt obligations to fund our construction activities.'1
AnalysisAnalysis: this is the trade-off of a debt-funded build. When a project is finished, its interest stops being capitalised and starts being expensed just as its revenue begins. The share improves only if new plants earn more than their financing costs, so it is best read across several quarters, not from one strong period.
Capital spending ran well ahead of operating cash flow, leaving free cash flow of minus $597M, wider than a year earlier.
Capital expenditure was $1.64B this quarter against operating cash flow of $1.05B, or 1.57 times. Free cash flow was minus $597M, or -17.4% of revenue. In the same quarter a year earlier, capex was $1.33B against operating cash flow of $976M, and free cash flow was minus $356M.1
Over the last three fiscal years capex was $7.72B, $7.39B and $5.93B, against operating cash flow of $3.03B, $2.75B and $4.31B. The gap narrowed in the latest year, when free cash flow was minus $1.62B against minus $4.64B the year before.1
The filing lists debt financings, operating cash flow and supplier financing arrangements as the main sources of cash in the first half. It treats cash received from transferring tax credits as an operating inflow, so part of operating cash flow depends on the tax credit rules.1
AnalysisAnalysis: operating cash flow covering capex would be the sign that the build has started to fund itself. Until then, growth depends on lenders, tax partners and buyers for stakes, and while the merger is pending, new debt needs the buyer's consent.
Gains on disposals, a lower tax bill and the absence of last year's lease losses turned a loss into $426M of profit.
Gain on disposal and sale of business interests was $209M against $70M a year earlier, mainly from selling part of the Fluence stake. That equals 49.1% of the $426M net income attributable to AES, though the gain is measured before tax and net income after it.1
Two other lines also moved sharply. Other expense fell to $27M from $295M, because a year earlier AES booked losses on the start of sales-type leases at AES Clean Energy. Income tax was $28M, 6.2% of pre-tax income of $449M, against $167M, or 428% of $39M, a year earlier. The filing ties the low rate to investment tax credits and the Fluence sell-down.1
One item went the other way. Asset impairment was a $30M expense, against a $154M reversal a year earlier that came from reclassifying the Mong Duong plant in Vietnam.1
AnalysisAnalysis: net income attributable to AES swung from a $95M loss to a $426M profit, but much of that swing sits below operating margin, in items that do not repeat on a schedule. Operating margin and cash flow give a steadier reading of the business this quarter than net income does.
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Member research, then your own questions on ChatGPT.
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Which parts of the quarter's profit came from contracts that recur, and which from markets, stake sales and tax.
What has to change for operating cash to cover capital spending, and how interest costs shape that path.
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Business Lens describes AES Corporation from its own filings with the SEC. It is not a view on its shares, a target, or advice to buy, sell or hold anything; figures are as filed and may be restated by the company later. The filing, the dates and the version are under the financial data above.