'Big five' power firms increase annual profit by 26% to $821 million

Thursday, 26 August 2021

Genesis is forecasting a jump in earnings this year, subject to market conditions.

Genesis Energy has capped-off the reporting season for big power companies by posting what it described as a “strong” financial result and increasing its dividend pay-out.

The company is the last of the country’s five big ‘gentailers’ – which also include Meridian, Contact, Mercury and Trustpower – to report its result for the year.

Together, the five power firms have posted a combined annual net profit of $821 million for the year to the end of June, up from $653m the previous year.

That was in the midst of a tumultuous period for the industry marked by soaring wholesale prices, factory closures and growing calls from power buyers and retailers for reform.

* Big firms put knife into power market saying Meridian made $3.5b excess profit

* Contact Energy promotes 'ThermalCo' proposal as profit rises 50%

Earlier this month, Stats NZ reported that carbon emissions from the sector, including some other utilities, rose 13 per cent last year as the country relied more on burning fossil fuels to generate power.

The five companies’ combined operating profits for the year edged down 1 per cent but remained just over $2.3b.

On Tuesday, the Major Electricity Users Group said the country’s biggest power firm, Meridian Energy, had enjoyed excess profits totalling $3.5b over 20 years, a calculation the power firm has disputed.

Genesis’ net profit for the year to the end of June slipped 26 per cent to $34 million, but it reported a 42 per cent rise in its “underlying” earnings to $75m and its operating profit edged up $2m to $358m.

The latter figure was exactly as forecast by broker Forsyth Barr.

Genesis also forecast a big jump in its operating profit to between $420m and $440m next year, subject to “market conditions”.

It declared a final dividend of 8.8 cents a share, up from 8.675c last year.

This year’s result was impacted by the loss of a carbon-credit dispute with Australian gas supplier Beach Energy which added $33m to Genesis’ costs in prior years and which is expected to end up costing the company a total of more than $100m.

Chief executive Marc England said the firm’s power plants proved their worth this year, when a third coal turbine was brought back out of storage and pressed into service at its Huntly power station to cope with a dry summer and the impact of a gas shortage.

The company indicated it had burnt through about 1.5 million tonnes of coal in the year to June, up from about 700,000 tonnes the previous year.

It expected coal use to drop below 600,000 tonnes in the current financial year and fall further thereafter.

It indicated in a presentation that it was envisaging it could continue to operate its Rankine turbines beyond 2030, but by burning biofuels, to provide power in dry years when hydro generation was low.