Genesis Energy ups dividends as free cash flow increases

Genesis Energy became the latest electricity company to increase its distributions to shareholders as it reported a 113 percent increase in net profit of $104.8 million on marginally increased revenues of $2.1 billion in the year to June 30.

Chair Jenny Shipley said in a statement the board was “satisfied” with a “strong” performance from Genesis, the country’s largest electricity and gas retailer, in its first full year of operation since being partially privatised in April 2014. The company also said chief executive Albert Brantley will leave next year.

Earnings before interest, tax, depreciation, amortisation and movements in the fair value of financial instruments, often seen as a preferred measure for underlying performance, rose 12 percent to $307.8 million.

The company will pay an 8 cents per share final dividend on Oct. 6, an increase from last year’s 6.6 cents, taking total distributions in the current financial year to 16 cents, compared with 13 cents in the previous financial year.  That equates to 80.9 percent of free cash flow, compared with 80.4 percent the previous year.  Free cash flow at $197.7 million was 22 per cent higher than the previous year.

Falling global oil prices saw returns from Genesis’s 31 percent interest in the Kupe oil and gas field fall, with the oil and gas segment of operations showing a 13 percent drop in Ebitdaf to $93.5 million, with Kupe contributing 27 percent of Ebitdaf in the latest year, compared with 35 percent the previous year.

Improved cost-to-serve ratios saw the ‘customer experience’ segment improve Ebitdaf earnings by $4.7 million to $87.2 million, while the energy management segment, which measures the company’s wholesale electricity generation operations, showed a $32.2 million improvement, up 19 percent on the previous year, at $201.1 million.  Contributors to that result were a 4 percent increase in total electricity generated to 6,698 Gigawatt hours, and a 7 percent improvement in the average price received for wholesale electricity, at $75.41 per Megawatt hour.

Total electricity, gas and LPG customers slipped 2 percent to 636,676.

Genesis used 31 percent more coal and 5 percent less gas on electricity production during the year.  Today’s statement confirmed the two remaining 250MW gas and coal-fired units at its Huntly power station site would close in 2018, barring a major change in market conditions.

Genesis has been running down coal stockpiles at Huntly in anticipation of the closure and last week cancelled its coal contract with Solid Energy, using the state-owned coal miner’s financial distress as a trigger to quit existing contracts early.


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