Power generator and retailer Genesis Energy said higher fuel costs drove its first half net profit down by $40 million to just $9 million in the first half to December 31, but that it expected an improved second half.
At the operating level, the company's earnings before interest, tax, depreciation, amortisation and financial instruments (EBITDAF) came to $167m, down from 15 per cent from $197.5m in the previous corresponding period.
Underlying earnings fell by $26m to $16m. The company announced a slightly improved interim dividend of 8.525c, up from 8.45c.
Genesis said a strong retail performance was offset by challenging wholesale market conditions due to lower hydro generation and gas shortages.
"The strong retail segment performance, which saw the growth of new products and digital services, was offset by higher fuel costs and lower hydro generation in the wholesale segment," chief executive Marc England said.
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Genesis' wholesale segment performance was dampened by higher fuel costs, constrained national gas supply, and lower hydro generation - 15 per cent below the prior year.
Kupe also had a planned statutory 30-day outage, which affected its contracted gas supplies.
The consequence of this was increased thermal generation at elevated fuel costs, lowering the overall wholesale result.
Construction has now begun on the new 450 GWh per annum Waipipi Windfarm in Taranaki, through the Tilt Renewables partnership.
It will be operational in 2021 and Genesis will buy its entire output of zero-emissions, renewable electricity.
Genesis expects an improved performance in the second half of 2020 with full Kupe Production and improved trading opportunities resulting from planned outages elsewhere in the sector.
Subject to normal hydro inflows and expected market conditions, EBITDAF guidance for the full year ended 30 June 2020 was been revised slightly to a range of $360m to $370m. The previous range was $360 to $380m.
During the period the Crown, as the majority shareholder in Genesis, received $45.1 million dividends of which $35.4 million was paid in cash and $9.7 million was paid in shares.