24 Aug 2023

Genesis Energy's profit and emissions drop

1:28 pm on 24 August 2023
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Genesis energy hopes to start its Huntly Unit 5 gas plant before May next year Photo: Supplied

Genesis Energy's full year profit has dropped following a reduction in thermal generation and higher costs due to inflation, but the company's emissions fell.

Favourable hydro conditions saw the highest ever proportion of power generation from renewable sources since the company formed, in 1999.

Key numbers for the year ended June 30, compared with a year ago:

  • Net profit $195.7m vs $221.9m
  • Operating earnings $523m vs $440m
  • Revenue $2.3b vs $2.8b
  • Full year 17.6 cost per share vs dividend 17.6 cps

Chief executive Malcolm Johns said thermal generation fell to record lows, resulting in significantly reduced fuel costs and a 45 percent reduction in emissions compared to the year prior.

The lower thermal generation was also the key driver in a 16 percent drop in revenue to $2.3 billion and a 12 percent fall in profit to $195.7m.

The impact of inflation meant increased costs for insurance, software and staff, Johns said.

"Staff numbers rose, particularly in customer facing roles, and contributed to an 11 percent increase in operating expenditure to $330.2m."

Favourable hydro conditions throughout the year led to 65 percent of the company's generation coming from renewable sources, the highest in the company's history.

Johns said the result enabled the company to further invest in renewable generation, with a planned solar farm in Canterbury of 52 MW and rights to [

https://www.rnz.co.nz/news/business/496337/genesis-announces-plans-for-three-new-solar-energy-farms three other sites] in the North Island that could deliver approximately 400 MW combined.

A final investment decision on the Canterbury development was expected later this year.

"We continue to deliver value for shareholders, build the capability of our people to deliver for our customers and support the communities in the areas in which we operate while investing in grid-scale solar and examining other renewable options for the future," Johns said.

"It is particularly pleasing to see customer numbers grow across all brands and that our focus on lifting service levels is recognised both through customer sentiment and service industry awards."

The company was also looking at different options for the Huntly Power Station over the coming decades, he said.


The company expected operating earnings for the 2024 financial year to be about $430m, subject to hydrological conditions, gas availability, and any material adverse events or unforeseeable circumstances.

Operating expenditure was expected to be about $375m, including additional technology spend of about $25m and increased spend on strategic growth initiatives.

Capital expenditure was expected to be about $165m, including the costs of $65m in investment in the Kupe KS9 well within the existing gas field and other key capital expenditure projects.

The Genesis Huntly Unit 5 gas plant was scheduled to return to service in May next year, but options were being explored to possibly return the unit to service earlier and material damage and business interruption insurance cover was already in place.

"The financial impact of this event, based on current market conditions, plant and fuel availability, and mitigating factors is estimated to be in the range of $20 million to $30 million, net of insurance proceeds," Johns said.

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