Infratil downgrades guidance after Australian energy assets sale

Infratil [NZX: IFT], the infrastructure investor, has lowered earnings guidance for the coming year by as much as $40 million, reflecting the sale of its Australian energy assets.

The Wellington-based company now expects annual earnings before interest, tax, depreciation, amortisation and asset valuation changes will be between $520 million and $545 million in the year ended March 31, 2015, from a previously advised range of between $530 million and $560 million, but still above its 2014 Ebitdaf of $500 million. Yesterday, it finalised the A$646 million sale of its Australian energy assets, Lumo Energy and Direct Connect, to Snowy Hydro.

The company flagged the sale of its Australian energy assets in May, after earnings at Infratil Energy Australia Group fell to A$61 million in the year ended March 31, from A$80 million a year earlier. The decline was inflated by the effect of translating earnings back into a strong kiwi dollar. The company expects proceeds from the sale to be $668 million, of which $44 million will be paid to its manager H.R.L Morrison & Co.

Infratil flagged a net gain on asset revaluations and realisations of between $335 million and $345 million for the 2015 year, which reflects the IEA sale, as well as $3 million from its sale of PayGlobal and $6 million from the disposal of property.

"They won't have the earnings from those Australian assets that they've sold. That was always going to be the case," said Grant Williamson, director at Hamilton Hindin Greene. "Net gain on asset revaluations and realisations is a pretty chunky amount to throw in there."

Shares of the infrastructure investor surged to a six year high in September after it announced the sale of IEA, as the company flagged a possible capital return to shareholders with the proceeds. The company said it will update investors on this at its first-half results next month. The stock last traded at $2.83 and has gained 25 percent since the start of the year.

Infratil also revised its guidance on its annual operating cash flow to between $300 million and $320 million, from an earlier range of $330 million to $360 million. It expect its net interest to be between $170 million and $180 million, from a previous $180 million to $190 million. Annual depreciation and amortisation was revised to a range of $150 million to $160 million, from between $170 million and $180 million.

Infratil's net debt was $354 million as at September 30, comprising of $989 million in infrastructure bonds, $111 million in other drawn debt and held cash balances of $746 million, prior to the cost of the IEA sale, which it expects to be $55 million, including Morrison & Co's fee.

(BusinessDesk)