Genesis Energy, the country's biggest electricity retailer, posted an 11 per cent decline in first-half earnings as cheap oil and a wet spring kept wholesale prices low, offsetting better margins on the retail side of the business.
Earnings before interest, tax, depreciation, amortisation and fair value movements (ebitdaf), a favoured measure of power companies, fell to $155.7 million in the six months ended December 31 from $175.5m a year earlier, the Auckland-based company said in a statement. Revenue shrank 7.3 per cent to $965.3m, largely from wet weather keeping hydro-lakes full, while at the same time demand was relatively flat. Net profit increased 4.2 per cent to $37.4m due to a turnaround in the fair value of interest rate swaps.
Genesis bought New Zealand Oil & Gas's stake in the Kupe gas and oil field as part of a broader strategy to generate short-term revenue gains and ultimately lead to a more efficient business. That acquisition is seen helping the company generate ebitdaf of between $320m and $330m in the year ending June 30, compared to a previous forecast of $305m to $325m. At the time of the purchase, Genesis said it would add $15m to earnings.
"The company's transformation continues to accelerate and the business performed well against a backdrop of unfavourable market conditions, which have been well-signalled to the market," chair Jenny Shipley said.
Genesis's retail business fared better, even as electricity customer numbers shrank, with earnings up 10 per cent to $62.7m as the power company cut costs and spent less trying to acquire new customers.
The board declared an interim dividend of 8.2 cents per share, payable on April 13 with a March 30 record date. That was unchanged from a year earlier.
The shares last traded at $2.13, and have gained 22 per cent over the past 12 months.