Genesis Energy profit jumps in fullyear result

The numbers

AUCKLAND: Genesis Energy has improved its fullyear profit, supported by the revaluation of derivative contracts, and the company avoided a repeat of oneoff costs that dented the previous year’s result.

The energy generator and retailer’s operating earnings increased 24%, but revenue dropped 12% as wholesale electricity sales fell.

Genesis also faced rising operating expenditure as staff costs increased and due to the continuation of its digital transformation programme.

Genesis Energy chief executive Marc England said the company demonstrated its role in delivering energy security for New Zealand, as supply chain issues and the war in Ukraine created energy crises elsewhere.

‘‘Our fixed price gas supply contracts and coal purchased well in advance of global supply issues have cushioned New Zealand’s electricity system from price shocks seen elsewhere in the world,’’ he said.

‘‘More recent rainfall has also added to a healthy level of hydro energy for the rest of 2022.’’

Genesis forecast operating earnings to be $455 million in 2023, depending on hydrological conditions, gas availability and barring any unforeseen circumstances.

It said current ‘‘swaption’’ contracts would end this December, and

June 30 figures compared with the corresponding period last year.— Net profit $221.9m Operating earnings $440m Revenue $2.8b Fullyear dividend 17.6cps

depending on the outcome of negotiations and market conditions in the second half, there was a potential for more variability in the current year’s results.

Its capital expenditure guidance for 2023 is about $80 million.

The company also remained on target to meet its ‘‘sciencebased target’’ of sustainably reducing 1.2 million tonnes of annual carbon by 2025.

As New Zealand transitioned to a higher level of renewable electricity, thermal backup would remain essential to maintain security of supply, Mr England said.

‘‘Our forecasts show New Zealand’s electricity generation will be 96%98% renewable by 2030, but there will still be times when it doesn’t rain, the wind doesn’t blow and the sun doesn’t shine.

‘‘Huntly can continue to provide security to the renewable electricity system day to day for the country’s energy consumers to decarbonise over the long term,’’ he said. — RNZ