As expected, Genesis Energy turned in a sharply lower first-half profit.
As expected, Genesis Energy turned in a sharply lower first-half profit.
Genesis Energy says it will not be raising its power prices any time soon, despite a slump in its first-half earnings.
Competitor Mercury NZ said on Tuesday its prices would rise by between 5 to 8 per cent for most customers from April 1, reflecting higher costs.
And on Monday,Contact Energy warned consumers would face significantly higher power bills from April 2025.
Genesis Energy chief executive Malcolm Johns said he had noted the comments on pricing from competitors.
“There is no question the wholesale market is pretty bullish at the moment, but we will continue our normal cycle of price reviews,” he told the Herald.
Asked if Genesis would be hiking its prices any time soon, Johns said: “No.”
In its result, Genesis said its earnings dropped in the first half as generation costs rose due to lower hydro inflows – relative to the very high levels of a year ago - and to the extended outage of its gas-powered “Unit 5″ turbine at Huntly.
Unit 5 - which supplies continuous, or baseload power, came back on stream in January after a nearly seven-month absence from the grid.
The outage and hydrology helped drive the company’s earnings before interest, tax, depreciation, amortisation and financial instruments (Ebitdaf) down 32 per cent to $202 million for the first half.
The company’s net profit came in at $38m, down 74 per cent.
Genesis - just over half-owned by the Government - last year advised it was paring back dividends in order to invest more in renewables.
In today’s result, Genesis cut its interim dividend to 7 cents a share from 8.8 cents, in line with new policy.
Last November, the company said it would direct free cash flow from its investment in the Kupe gas field to renewables development.
It also issued a full year guidance of 14 cents, down from last year’s actual total payout of 17.6c.
Malcolm Johns, CEO of Genesis Energy. Photo / NZ Herald
As part of its new strategy “Gen35″, Genesis will invest in solar, grid scale battery storage and wind to will help grow its renewable portfolio to around 8,300 gigawatt hours (GWh) - up 160 per cent on the company’s current 3200 GWh of renewable generation.
Genesis’ proportion of renewable generation is targeted to rise to 95 per cent by 2035.
In its result, the company said it had grown its customer base for the fourth consecutive quarter, adding nearly 9500 customers, up 2 per cent.
Genesis started executing its long-term digital platform investments, and inflationary pressures contributed to a 16 per cent increase in operating costs to $181.5m.
As telegraphed last year, Genesis is to cut around 200 retail jobs over 2024 and 2025, with 70 per cent of those losses confirmed for 2024.
Looking ahead, Genesis expects its Ebitdaf for the full year to be around $430m, and the financial impact of the Unit 5 outage is estimated to be in the range of $20-25m.
Further out, the company’s Ebitdaf guidance for 2025 remains at around $500m.
Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.
