Announcement
HALFYR: GNE: Genesis delivers strong result while investing for growth
08:30am
GNE
28/02/2022 08:30
HALFYR
PRICE SENSITIVE
REL: 0830 HRS Genesis Energy Limited (NS)
HALFYR: GNE: Genesis delivers strong result while investing for growth
Genesis delivers strong HY22 result while investing for future growth
- EBITDAF $216.0 m (down 3% on pcp)
- Net Profit $52.0m (up 63% on pcp)
- Underlying Earnings $59.7m (up 1% on pcp)
- Earnings Per Share 5.0 cps (up 62% on pcp)
- Underlying EPS 5.8 cps
- Interim dividend 8.6 cps (up 1% on pcp)
- Free Cash Flow $157.7m (down 4% on pcp)
Genesis Energy (ASX: GNE, NZX: GNE) delivered another strong performance in
the first half of FY22 with EBITDAF of $210.3 million, and net profit of
$84.7m which is 63% up on the same period last year. The result underlines
the company's momentum as it invests for future growth in new renewable
generation and enhanced customer experiences.
The Retail segment performed well through a combination of strong margins,
improved efficiencies and customers feeling supported through lockdown. Net
customer churn fell for a sixth consecutive quarter and was 13.2% in the
half. Our brand net promoter score lifted to its highest level of +26.
Netbacks continued to grow with gas, in particular, performing strongly.
In the Wholesale segment, the flexibility of our assets continues to support
the market during periods of high spot prices. During periods of lower
prices, when more renewable generation was available, our portfolio flexed to
benefit from lower spot prices.
Operating expenses rose 8% to $144.3m, which included ongoing investment in
our digital transformation, the Future-gen strategy, and building a pipeline
of new solar development options. Additional cost was also incurred to
protect our people and operations from Covid-19, with the introduction of
saliva PCR testing at generation sites and the purchase and deployment of
rapid antigen tests across the whole business. Our people have completed more
than 15,500 Rapid Antigen tests to date.
An interim dividend of 8.7 cps and the reintroduction of the Dividend
Reinvestment Plan has been approved by the Board.
Chief Executive Marc England said Genesis has delivered another strong result
while building capability for the future.
"We're investing in enhanced digital capabilities, new sources of renewable
generation, and in maximising the efficiency and output of our assets, all
important for future growth as we manage the transition to a sustainable
future," England said.
"This will be a pivotal year for the electricity sector and New Zealand's
climate agenda. There is significant investment in renewables being made, the
Emissions Reduction Plan is due from Government and Budget 2022 will allocate
capital to our climate response. Genesis has a key role to play with
agreements for wind and geothermal generation, expanding our portfolio into
grid-scale solar, and continuing our work to ensure back-up generation at
Huntly supports the transition."
Future proofing our assets
Genesis undertook three significant investment projects during the period, at
Kupe, Tekapo B and the Waikaremoana Power Scheme. Along with our Kupe joint
venture partners, a $72m project was completed that restored production
capability back to 77 TJs per day, equivalent to approximately 15% of New
Zealand's daily natural gas demand. The joint venture partners are now
investigating the potential for drilling another development well to further
increase recovery from the field.
Work started on stage two of a challenging upgrade of our Tekapo B power
station that will future-proof it for decades. The $15m+ project will deliver
operational flexibility, reduce running limitations and annual maintenance
costs. It follows the completion of a two-year $26.5m project to install a
new intake gate at Tekapo A in FY21. At Piripaua, on the east coast of the
North Island, a $7.7m project is underway to overhaul two turbines, one this
summer and one next summer.
Empowering New Zealand's sustainable future
Genesis continues to progress its Future-gen strategy, signing new power
purchase agreements for wind and geothermal generation and a joint venture
agreement with internationally recognised solar developer, FRV Australia.
Focus is now on building the pipeline of development opportunities.
Huntly Power Station remains a viable alternative to the proposed Lake Onslow
pumped hydro scheme due to its location close to demand, infrastructure
already in place, and its accessible workforce. Scenario analysis we have
undertaken through to 2030 shows the electricity sector will be 96% - 98%
renewable by the end of the decade. However, dry year risk and increased
renewable intermittency will mean back-up in the form of both peaking
capacity and dry-year energy storage will still be required. Biomass through
Huntly's Rankine units could provide a relatively low-cost renewable back-up
option out to 2040.
FY22 guidance
The FY22 EBITDAF guidance range has been updated to $430 to $440 million
subject to hydrological conditions, gas availability, any material events,
one-off expense or other unforeseeable circumstances. FY22 capital
expenditure guidance is up to $84 million.
Further information on the company's operations and financing can be found in
the HY22 investor presentation and in the 2022 Interim Report. Both can be
found at www.genesisenergy.co.nz/investors.
ENDS
For investor relations enquiries, please contact:
Tim McSweeney
GM Investor Relations & Market Risk
M: 027 200 5548
For media enquiries, please contact:
Chris Mirams
GM Communications & Media
M: 027 246 1221
End CA:00388019 For:GNE Type:HALFYR Time:2022-02-28 08:30:45
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