Genesis Energy (GNE) H2 2024 earnings summary

Executive summary

• FY24 was challenging due to adverse hydrology, unplanned outages, and a structural gas shortage, but strategic objectives under Gen35 were delivered, including major investments in renewables and grid-scale batteries, demonstrating portfolio resilience.

• Customer numbers grew 2.7% to 496,596, and employee engagement remained 6% above the national benchmark at 81%, despite significant organizational change and a simplified retail model.

• EBITDAF fell 22% to NZD 407 million, and NPAT dropped to NZD 130–131.1 million, driven by lower hydro inflows, plant outages, and gas shortages.

• Full year dividend was NZD 0.14 per share, down from 17.6cps in FY23, with a yield around 9% and a reset policy to maintain this level through FY28.

• Major progress was made in renewables, including financial close on Lauriston Solar Farm, acquisition of the Edgecumbe solar asset, and FID on a 100 MW/200 MWh battery at Huntly.

Financial highlights

• Revenue increased 28% to NZD 3.1 billion, driven by higher wholesale prices and retail momentum, but gross margin declined 10% due to higher generation costs and lower hydro output.

• Operating costs rose 10% to NZD 363.1 million, above inflation but in line with strategic investment plans.

• Capital expenditure surged 77% to NZD 143.7 million, focused on asset upgrades, renewables, and technology.

• Net debt to EBITDAF increased to 2.7x, above the 2.5 target but below 3, with adjusted net debt at NZD 1,223.8 million.

• Insurance settlement of NZD 29–29.4 million for Huntly Unit 5 outage included in other revenue.

Outlook and guidance

• FY25 EBITDAF guidance is around NZD 460 million, with capital expenditure expected at NZD 180 million and OpEx at NZD 390 million.

• Earnings guidance is subject to volatility in electricity and gas markets, gas and plant availability, hydrology, and adverse events.

• Strategic focus is on delivering "Eight by 2028" and Gen35 objectives, targeting mid-500s EBITDAF by FY28 and net zero by 2040.

• Dividend policy reset to 14cps, with intention to maintain this level through FY28 while prioritizing renewables investment.