High rainfall helps Genesis upgrade earnings guidance by 10pc

Genesis Energy has upgraded its earnings prospects. Photo / Supplied

Genesis Energy has upgraded its operating earnings guidance for the current year by 9.8 per cent due to higher inflows into its hydro dams over the first quarter.

The power generator and retailer said it is now looking at earnings before interest, tax, depreciation, amortisation and financial instruments (EBITDAF) of $500 million, up from a previous guidance of $455m, and last year's EBITDAF of $440m.

"Favourable trading conditions in Q1 2023, primarily due to higher hydro inflows and thermal generation flexibility have meant that EBITDAF performance in Q1 FY23 was higher than expected," the company, which holds its annual meeting today, said.

"Due to lower thermal generation, carbon emissions declined by 50 per cent relative to Q1 2022," it said.

Genesis has the coal and gas-fired Huntly Power Station, which is used when renewable energy sources become constrained.

The new earnings forecast remained subject to hydrological conditions, gas availability, and any material adverse events.

In speech notes to the annual meeting, chair Barbara Chapman acknowledged outgoing chief executive Marc England's contribution to the company.

England, who is taking up a new role as CEO of Ausgrid in New South Wales, had added "significant value" to Genesis during his six-year tenure.

"He has overseen considerable transformation and growth in the business during a critical period for the sector," she said.

"He leaves us having positioned the company for the future as a more sustainable, inclusive and customer-focused business," Chapman said.

Genesis Energy's chief customer officer Tracey Hickman will fill the role as interim CEO until new chief executive, Malcolm Johns, joins the company in March.

The company's 2022 EBITDAF result was negatively impacted by an arbitration decision and the use of the carbon fixed priced option.

Its net profit after tax was $222m, up from $32m in 2021.

This marked increase in net profit was due largely to the revaluation of financial contracts, which were impacted by market conditions beyond Genesis' control.

Six years ago, when England became CEO, Genesis had EBITDAF of $335m.

"We've lifted that more than 30 per cent to $440m in FY22, while delivering an annualised total shareholder return over the period of 10.3 per cent," she said.

Customer churn came to 12.8 per cent, down from 15.9 per cent in 2021, and was down further in the first quarter of the current year.

Shares in Genesis last traded at $2.75, up 13c or five per cent from Thursday's close.