Strong first half result reported by Genesis Energy

29 February 2012

Today, Genesis Power Limited (trading as Genesis Energy) reported a net profit after tax for the half year of $38.3 million, up from $17 million for the same period in 2010, an increase of 125%.

Earnings before net finance expense, income tax, depreciation, amortisation, fair value changes and other gains and losses (EBITDAF) also improved (up 37%) to $190.48 million from $139.34 million in the comparable period in 2010.

The strong result reflected higher revenues from electricity sales, gas sales and Genesis Energy’s 31% share of petroleum sales from the Kupe Oil and Gas Field.

The six months were characterised by continuing competition for retail electricity and gas customers plus below average water inflows into many of the country’s hydro lakes.

The addition of the Tekapo A and B hydro stations to the Genesis Energy generation portfolio and an higher average wholesale price of $79.89 per megawatt hour, up 30% on the same period in 2011, increased electricity revenue.

Genesis Energy Chairman, Dame Jenny Shipley, emphasised that the Company’s core strategic focus is to grow value by improving customer experience. “The installation of advanced meters is at the heart of our strategy to enhance the customer experience with innovative products and services”.

As at 31 December 2011, our installed base of Advanced Meters stood at 233,819, up from 123,749. Genesis Energy expects to shortly hit the milestone of a quarter of a million installed Advanced Meters and to complete fully the installation programme by 2013.

“We are concentrated on transforming our business into the leading customer-focused New Zealand energy company and delivering steady long term returns to our shareholder,” she said.

Genesis Energy Chief Executive, Albert Brantley said, “The Company’s diverse generation assets and national electricity and gas customer base are delivering strong earnings against challenging market conditions.”

The Genesis Energy and Energy Online retail brands increased their customer base by 12,820 to a total of 669,138 customer accounts, including electricity and gas. The Company’s LPG customer base grew 94% from 3,450 to 6,684. Customer satisfaction levels increased to 93% from 91% at the end of 2010.

Genesis Energy’s share of the total electricity retail market grew to 26.9% compared to 26.6% at 31 December 2010. The Company’s gas market share also increased, from 43.3% to 43.9%.

The market share gains reflect the continuing success of a campaign to recruit new customers, particularly in the South Island, where the number of Genesis Energy customer accounts for electricity and bottled LPG has doubled to 60,714.

Generation volumes from the Company’s hydro, thermal and wind generation plant in the six months was up 12.7% at 3,983GWh, compared to 3,535GWh in the same period of 2010. The newly acquired Tekapo A and B stations (185MW) contributed 493GWh and lifted the contribution from renewable energy sources to 1,460GWh from 1,120GWh in 2010. Thermal generation was up slightly at 2,524GWh from 2,415GWh in 2010, reflecting dryer hydrological conditions, particularly late in the half year, necessitating more frequent dispatch of the coal-fired units at the Huntly Power Station.

Notwithstanding the current deteriorating national hydro storage, Genesis Energy remains on track to place one 250MW coal/gas fired unit into long term storage in November of this year as certification for the unit will expire in December 2012.

During the reporting period a resource consents hearing commenced for the up to 860MW Castle Hill Wind Farm. The hearing concluded after balance date in February 2012. A decision from the Commissioners is yet to be announced.

Putting the Castle Hill project in a wider perspective, Mr Brantley observed that the generation market is fully developed for near term market demand growth. “Our current generation development projects give us future options. However, we only invest in new plant if it is cheaper than buying from the wholesale market. We are concentrating on business development and innovation as a whole, not simply construction of new generation.”

“Genesis Energy has a sound business strategy focused on being New Zealand’s leading energy company. We are growing our customer base and gaining strong earnings from our diverse portfolio of reliable and strategic assets. This interim result has demonstrated the value of that strategy,” said Mr Brantley.

Mr Brantley concluded by highlighting the Company is on track to meet all of its performance targets set out in its Statement of Corporate Intent.

Ends

 
Note: A webcast of a Half Year Results presentation will be available at 10am on 29 February. It can be accessed via the Investor Centre of the Genesis Energy website:
www.genesisenergy.co.nz/about-us/investor-centre

For more information contact:
Richard Gordon
Public Affairs Manager
Genesis Energy
P: 09 580 4782
M: 021 681 305