“With our asset mix, which includes thermal and obviously the Kupe field, there are funds and partners who will not invest in Genesis and that impacts on our share price.”
Genesis, which installed Malcolm Johns as chief executive in March, is planning to release details of a major strategic review in November.
“We are very cognisant of how we get our share price into a position that we would want it to be,” Chapman said.
“There are macro factors weighing on the Genesis share price that our competitors do not have, and they are largely around the appetite of some investors for fossil fuel and upstream oil and gas, and that’s impacted on the share price,” she said.
Johns said the company was in the early stages of a transition, “and the investment community is evolving its understanding as to what that transition looks like”.
He noted that both Mercury and Meridian had called for more thermal peaking capacity to be built into the system.
“What these two companies are telling us is that New Zealand requires a mix and ultimately we have to look at that transition through a collective lens,” he said.
“Different companies play different roles and I think we have a good understanding as to where touch points are that we need to speak to, and we will have more to say about that in November.”
Looking ahead, Genesis has forecast its operating ebitdaf for 2024 to be around $430 million, down from last year, as the country returns to more normal hydrological conditions, and to take into account the impact of the Unit 5 outage at Huntly.
The financial impact of the outage had been mitigated by alternative plant availability and, earlier in the year, wholesale electricity market conditions.
Unit 5, which by itself can power up to 400,000 households, is expected to be back up and running by late January 2024.
Johns told shareholders that the Zero Carbon 2050 Act meant that achieving that goal was no longer a point of debate.
“This is exciting because there appears universal agreement that the best way to achieve that outcome is to electrify as much of our lives and economy as we can over the next quarter-century,” he said.
“New Zealand faces the largest asset transition challenge in our history, at both a household and business level.
“New Zealand must proactively move away from assets that operate solely on fossil fuels and towards assets that operate primarily on electricity.
“This means the demand side dynamics will drive the supply side dynamics of the transition,” Johns said.
In August, the 51 per cent Government-owned Genesis said exceptional hydro power generating conditions helped take its operating earnings - ebitdaf - to a record $523.5m in the June year, up 19 per cent on the previous year. Genesis declared a final dividend of 8.8c, taking the total annual declared dividend to 17.6c - the same as the previous year.
That was despite free cash flow jumping by 27 per cent to $335.2m.
The dividend, as a percentage of free cash flow, fell to 56 per cent from 70 per cent.
Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.
