Strong financials, more customers and lower emissions

HALFYR
Mon, Feb 27 2023 08:30 am

Genesis Energy (GNE) continued to grow in H1 FY23, with EBITDAF of $298 million. During the six-month period customer numbers increased and carbon emissions declined.

(See table in attached announcement)

The company delivered H1 EBITDAF of $298 million, an increase of 42% from $210 million in H1 FY22. The revaluation of long-term contracts has resulted in a Net Profit After Tax (NPAT) of $145 million, a 72% increase on the same period last year. Note NPAT includes changes in the forecast return on long-term electricity supply contracts such as power purchase agreements for renewable generation. It does not represent realised cash profit today.

Genesis was able to generate a record 2,034 GWh from its three hydro schemes, 43% more than H1 FY22. Conversely, this reduced thermal generation at Huntly Power Station to record lows, significantly lowering fuel costs and reducing carbon emissions from generation by 470,000 tonnes (a 52% reduction versus H1 FY22).

The Company declared an interim dividend of 8.80 cps. This represents continued value for shareholders while retaining capability for future investment.

Interim Chief Executive Tracey Hickman said, “these results fall at an incredibly challenging time for many New Zealanders, with Cyclone Gabrielle and the Auckland floods. Genesis continues to offer support to communities and customers affected.”

Genesis enjoyed strong customer growth, gaining 10,273 customers to reach a total of 481,285, an increase of 2.2%. Residential churn also declined by 1ppt to 12% from the same period in FY22.

Genesis has progressed its strategic priorities, helping create a low-carbon future for New Zealand powered by renewable energy. This work included a successful trial burn of biomass at Huntly Power Station and securing the first site in its development of up to 500MW of grid scale solar generation.

EV Launch
In September Genesis launched EVerywhere, New Zealand’s first ‘energy roaming’ service for electric vehicle (EV) drivers, making it cheaper and easier to charge their EVs on the road. EVerywhere enables customers to use ChargeNet stations for the same price they pay to charge at home, saving up to 70% in on-road charging costs.

Biomass trial at Huntly
Genesis successfully completed a biomass burn trial at Huntly Power Station on 14 February, a significant step in its search for alternative fuel options for the Company’s thermal plant at Huntly. Biomass is seen internationally as a viable alternative to fossil fuels, in particular, in manufacturing and some industrial processes.

Hickman commented, “Huntly will continue to be critical to the country’s electricity system looking ahead, and the company is committed to explore more renewable fuel options to replace coal. Genesis has signed an agreement with Fonterra to work together in exploring the viability of a sustainable local supply chain of biomass. We’ll also collaborate with other industry partners as we attempt to reduce carbon emissions in our respective sectors.”

Solar development update
In February Genesis and its solar joint venture partner, FRV Australia, announced it had secured a fully consented, 90 hectare site near Lauriston on the Canterbury Plains. The site is expected to start generating electricity in late 2024.The site will hold approximately 80,000 solar panels with a capacity of 52 MW and generate around 80 GWh of renewable electricity annually - enough to power nearly 10,000 houses. First generation is expected in late 2024.

“Lauriston is poised to be one of the first large scale solar farms to reach operational stage in New Zealand, and it’s only the start,” said Hickman. “We are looking forward to making more announcements on solar during 2023.”

Malcom Johns to join as Chief Executive
As previously announced, Malcolm Johns will join Genesis Energy as Chief Executive on 6 March. Johns was previously Chief Executive of Christchurch Airport.

Kupe Development Well
Genesis Energy has confirmed its investment into a well development programme at the Kupe gas field (KS-9) pending Environment Protection Authority approval of consent applications lodged by operator Beach Energy. Gas is expected to continue to play a role through the energy transition in providing both back-up generation for dry periods and support for increased intermittent wind and solar generation. Without this additional gas, it is expected that emissions would be higher due to a greater need for coal generation.

While there has been further interest from third parties in acquiring Genesis' stake in Kupe, valuations have been considerably below value in use.

FY23 Guidance
FY23 EBITDAF guidance has been updated to around $515 million from around $500 million, subject to hydrological conditions, gas availability, and any material adverse events or unforeseeable circumstances.

Guidance includes an allowance in operating costs relating to the implementation of the new sales, service, and billing platform. This is subject to final vendor selection and implementation timeframes.

FY23 capex is expected to be around $80 million, excluding investment in the Kupe well development. Long-run outlook for stay in business capital expenditure is $50 million to $70 million. Capex related to the Kupe development well (KS-9) is around $75 million (split approximately $15 million in FY23 and the remainder in FY24).

ENDS


Investor relations enquiries:
Tim McSweeney
GM Investor Relations & Market Risk
[email protected]
M: 027 200 5548

Media enquiries:
Estelle Sarney
External Communications Manager
[email protected]
M: 027 269 6383





Announcement PDF


Markets News

NZ sharemarket down 1.13% for the week
Markets Market close

NZ sharemarket down 1.13% for the week

The S&P/NZX 50 Index closed at 11,796.21, down 39.83 points or 0.34%.

Graham Skellern 19 Apr 2024
Primary Sector

Bell Potter boosts Santana target price 53.5%

Aussie brokers increasingly like the look of a low-cost, high yield Otago gold play.

Pattrick Smellie 19 Apr 2024
Bell Potter boosts Santana target price 53.5%
Markets

Analysts upbeat about Tower's latest guidance

The insurer's shares have gained 36% so far this year. 

Rebecca Howard 19 Apr 2024
Analysts upbeat about Tower's latest guidance