Low prices pull down Genesis earnings
Retail competition along with cheaper electricity, gas and oil sees power firm’s revenue fall more than costs
Genesis Energy, New Zealand’s largest electricity retailer, posted a 2.7 per cent decline in annual operating earnings as lower electricity, gas and oil prices combined with ongoing retail market competition to reduce revenues slightly more than operating costs.
Earnings before interest, tax, depreciation, amortisation and movements in the value of financial instruments declined by $9.5 million to $335.3m in the year to June 30, on total revenues of $2.01 billion against $2.02b in the prior year, the Auckland-based company said. Total operating expenses fell to $1.68b from $1.75b.
The Genesis board was “satisfied with the overall performance of the company in what has been a challenging year,” chairwoman Dame Jenny Shipley said. “Genesis Energy continues to perform well in a constantly and quickly evolving energy market.”
The result reflected “a determination by the board to drive improved cost control and efficiencies to offset the external influences impacting on the business as it looks to the future”, she said.
Newly appointed chief executive Marc England, who replaced long-serving Albert Brantley in May, said the company was reorienting to improve its ability to “execute its strategies at speed”.
England has delivered a shakeup of the company’s senior management team. “In the short term, we are determined to extract more value from our existing operations while we implement our plans to deliver new services for our customers and thrive in the evolving energy market.”
Net profit after tax increased to $184.2m, from $104.8m the previous year, as its generation assets were revalued up by $138m, compared with no movement the year earlier.
The board declared a final dividend of 8.2c per share for total distributions for the financial year of 16.4c, compared with total distributions of 16c last year. The dividends are only 80 per cent imputed versus 100 per cent imputed in the previous year.
The final dividend will be paid October 14 with a record date of September 30. The company will forecast earnings at its October 19 annual meeting.
Earnings per share of 18.4c per share compares with 10.5c in the previous financial year.
Consistent with other players in the sector, capital expenditure plans for the year ahead are limited because of over-supply of electricity capacity, with just $39.7m of “stay-inbusiness” capex planned.