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APA Group outlines growth options

AAP logoAAP 24/08/2016 Prashant Mehra

Gas pipeline major APA Group has outlined plans to invest up to $1.5 billion for expansion of existing assets in Australia and to look for acquisitions in the US market, to keep up its growth momentum.

The company's ambitions were set out in response to speculation about the lack of growth opportunities, given the conflict with the corporate regulator over its dominant presence in the Australian gas pipeline market.

It said on Wednesday it will invest about $700 million on expansion and extension of existing pipelines in Australia, about $500 million on renewables and generation, and another $300 million in "mid-stream" areas such as storage over the next three years.

"APA is more than a gas pipeline business. We are also a power and gas generator and in renewables. We have developed skills and made investments in these sectors for a number of years," managing director Mick McCormack said.

APA has made a spate of acquisitions in the last two years to become Australia's largest gas pipeline operator, and holds a near-50 per cent interest in the sector.

The company has been the focus of concerns from the Australian Competition and Consumer Commission over its dominance of the east coast market, and the regulator recently called for an overhaul of regulations for the sector.

"Given our size, it is natural that the ACCC will have an interest in everything that APA does. But that doesn't mean we can't bid for any assets that come up," Mr McCormack told AAP.

"We are not necessarily looking at pipeline acquisitions, but even at pipeline extensions."

The company is, however, looking at acquisition opportunities in to the North American gas pipeline market, with many US pipeline assets now in need of recapitalisation.

"It is a big market but is going through tough times at the moment. So there might be some opportunities available," Mr McCormack said, but declined to identify any specific targets.

On Wednesday, the company reported a 68 per cent slump in full year profit to $179.5 million, mainly because of higher depreciation charges and interest costs related to its $US4.6 billion Queensland Curtis LNG pipeline acquisition last year. Revenue for the 12 months to June 30 rose 48 per cent to $1.66 billion.

It has forecast an up to nine per cent increase in FY 2017 earnings before interest, tax and depreciation to between $1.43 billion to $1.45 billion.

The gas infrastructure provider said it will pay a final dividend of 22.5 cents a share, similar to last year.

At 1530 AEST, APA Group shares were up 0.4 per cent at $9.25 each.

APA GROUP FY PROFIT SLUMPS

* Net profit $179.5m, down 68pct

* Revenue of $2.09b, up 35 pct

* Final dividend 22.5 cents a share, unchanged.

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