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Genesis first-half earnings fall 11pc

NZ Newswire logoNZ Newswire 27/02/2017 Paul McBeth

Genesis Energy, the country's biggest electricity retailer, has posted an 11 per cent decline in first-half earnings as cheap oil and a wet spring kept wholesale prices low.

Earnings before interest, tax, depreciation, amortisation and fair value movements (ebitdaf), a favoured measure of power companies, fell to $155.7 million in the six months ended December 31 from $175.5m a year earlier, the Auckland-based company said on Tuesday.

Revenue shrank 7.3 per cent to $965.3m, largely from wet weather keeping hydro-lakes full, while at the same time demand was relatively flat. Net profit increased 4.2 per cent to $37.4m due to a turnaround in the fair value of interest rate swaps.

Genesis bought New Zealand Oil & Gas's stake in the Kupe gas and oil field as part of a broader strategy to generate short-term revenue gains and ultimately lead to a more efficient business. That acquisition is seen helping the company generate ebitdaf of between $320m and $330m in the year ending June 30, compared to a previous forecast of $305m to $325m. At the time of the purchase, Genesis said it would add $15m to earnings.

"The company's transformation continues to accelerate and the business performed well against a backdrop of unfavourable market conditions, which have been well-signalled to the market," chair Jenny Shipley said.

Genesis's retail business fared better, even as electricity customer numbers shrank, with earnings up 10 per cent to $62.7m as the power company cut costs and spent less trying to acquire new customers.

The board declared an interim dividend of 8.2 cents per share, unchanged from a year earlier.

The shares last traded at $2.13, and have gained 22 per cent over the past 12 months.

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