27 Feb 2023

Genesis Energy reports $145.3m half-year profit

10:45 am on 27 February 2023
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Photo: Supplied

Power company Genesis Energy's first half profit rose sharply as full hydro lakes reduced the need for expensive coal and gas generation and higher gains in the value of its hedging contracts.

Key numbers for the six months ended December compared with a year ago:

  • Net profit $145.3m vs $84.7m
  • Revenue $1.155b vs $1.382b
  • Earnings before one offs $298.3m vs $210.3m
  • Carbon emission down 46 pct to 852 kilotonnes
  • Interim dividend 8.8 cents a share vs 8.7 cps

The company had record generation as its North Island hydro stations, benefiting from the wet spring allowing it to cut use of the coal-gas fired Huntly station to a record low, and with it reducing carbon emissions and fuel costs.

The drop in expenses considerably outpaced the fall in revenue, while the company increased customers by 2 percent to 481,285, with margins for electricity and gas sales increasing.

Acting chief executive Tracey Hickman said despite the record low generation out of Huntly, the station and thermal generation would still be needed for some time.

"Huntly will continue to be critical to the country's electricity system looking ahead, and the company is committed to explore more renewable fuel options to replace coal."

Genesis recently successfully trialled the use of biomass to replace coal and gas at one of its units in Huntly, and has now teamed with Fonterra to look at the viability of finding and developing a sustainable local supply.

The company has also just invested in the country's first large scale solar farm in Canterbury, which is expected to start generating late next year.

However, despite its increasing move to renewable generation, Genesis committed further funds to extend the production life of the Kupe gas field, in which it has a stake.

"Gas is expected to continue to play a role through the energy transition in providing both back-up generation for dry periods and support for increased intermittent wind and solar generation. Without this additional gas, it is expected that emissions would be higher due to a greater need for coal generation."

The company forecast operating earnings before one off costs of $515m from the previous $500m.

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