Genesis Energy’s earnings were down as generation costs increased, due to lower hydro inflows and the extended outage of Unit 5 at Huntly Power Station.
This resulted in earnings before interest, taxes, depreciation, and amortisation of $202 million for the first half of FY24, down 32 per cent on the corresponding period.
Genesis chief executive Malcolm Johns noted that the challenging operating environment underlined the flexibly of Genesis’ portfolio of generation assets, while good progress was made on key strategic initiatives.
“We’re a forward-looking business, setting the foundation for future grow through our Gen35 strategy that spans three horizons out to 2035,” he said.
“FY24 is the first of those and crucial for setting he platform to transition ourselves, our customers, and help the country reach net zero 2050.
“We’re making good progress.”
The company grew its customer base for the fourth consecutive quarter adding nearly 9500 customers, up 2.0 per cent and started executing its long-term growth strategy, Gen35.
With hydro inflows falling back from last year’s near historic levels, the Rankine units, with higher fuel costs and emissions, supported the market during the Unit 5 outage.
Both these factors also impacted gross margin, down $71.3m.
The reduced earrings meant that Net Profit After Tax (NPAT) was lower at $38m, a 74 per cent drop.
Digital platform investments and inflationary pressures contributed to 16 per cent iincrease in operating costs to $181.5m.
As outlined at investor day, the company’s Gen35 strategy has clear plans to tackle operating cost going forward and work is on track in this regard.
A review of the retail operating model is underway.
A reduction of around 200 roles is expected across FY24 and FY25, with 70 per cent confirmed in FY26.
The focus is on supporting staff through this process.
Johns said that the company was looking ahead to the winter with caution.
“National hydro storage is fluctuating, and gas supply is likely to be tight,” Johns said.
“Our thermal assets may again be relied upon to support the wholesale market, reiterating the importance of thermal generation to system security.
“We continue to work with Transpower on sector cooperation to support the market and on appropriate settings to ensure the New Zealanders have the power they need, when they need it.”
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