Genesis Energy, New Zealand's largest electricity retailer, said lower oil prices, increased carbon costs and its "below market" contract with the struggling Tiwai Point aluminium smelter will weigh on earnings this year.
Earnings before interest, tax, depreciation, amortisation and fair value adjustments are expected to fall to between $305 million and $325m in the year ending June 30, 2017, from $335.3m the previous year, the Auckland-based company said in a presentation for delivery at its annual meeting of shareholders today.
"The business is facing a number of market headwinds including lower realised oil prices due to the historically higher priced oil hedges now having rolled off, increased carbon costs and a new below market contract that was signed to support the ongoing viability of the Tiwai Point smelter," said chief executive Marc England.
"Offsetting this, the management team have worked hard to improve underlying business performance and the things we can control such as overhead costs and planned revenue improvement. These performance improvements collectively have created capacity to invest in new and transformational growth opportunities that will drive medium and long-term ebitdaf growth."
England said the constant need to promote discounted prices to replace customers who left was driving unnecessary cost to the business, and onto customers.
