Genesis Energy ups dividends as free cashflow increases

UPDATED: Genesis quashes market conjecture over Rankine units

EARLIER: Genesis Energy [NZX: GNE] became the latest electricity company to increase its distributions to shareholders as it reported a 113% increase in net profit of $104.8 million on marginally increased revenues of $2.1 billion in the year to June 30.

Chairwoman Jenny Shipley says the board is "satisfied" with a "strong" performance from Genesis in its first full year of operation since being partially privatised in April 2014.

The country's largest electricity and gas retailer also says chief executive Albert Brantley will leave next year.

Earnings before interest, tax, depreciation, amortisation and movements in the fair value of financial instruments, often seen as a preferred measure for underlying performance, rose 12% to $344.8 million.

The company will pay an 8c per share final dividend on October 6, an increase from last year's 6.6c, taking total distributions in the current financial year to 16c, compared with 13c in the previous financial year.

That equates to 80.9% of free cashflow, compared with 80.4% the previous year. Free cashflow, at $197.7 million, was 22% higher than the previous year.

Falling global oil prices saw returns from Genesis's 31% interest in the Kupe oil and gas field fall. The oil and gas segment of operations showed a 13% drop in ebitdaf to $93.5 million, with Kupe contributing 27% of ebitdaf in the latest year, compared with 35% the previous year.

Improved cost-to-serve ratios saw the 'customer experience' segment improve ebitdaf earnings by $4.7 million to $87.2 million, while the energy management segment, which measures the company's wholesale electricity generation operations, showed a $32.2 million improvement, up 19% on the previous year, at $201.1 million.

Contributors to that result were a 4% increase in total electricity generated to 6698 gigawatt hours, and a 7% improvement in the average price received for wholesale electricity, at $75.41 per megawatt hour.

Total electricity, gas and LPG customers slipped 2% to 636,676.

Genesis used 31% more coal and 5% less gas on electricity production during the year. The company confirmed the two remaining 250MW gas and coal-fired units at its Huntly power station site will close in 2018, barring a major change in market conditions.

Genesis has been running down coal stockpiles at Huntly in anticipation of the closure and last week cancelled its coal contract with Solid Energy, using the state-owned coal miner's financial distress as a trigger to quit existing contracts early.

(BusinessDesk)