The Government's hope for a
premium listing price for the last of the state-owned energy
companies took a hit yesterday when Genesis Energy reported
much lower revenue and profits.
Operating profit for the company, which was expected to be
listed in the first quarter of this year, was down $45.4
million, or 23%, to $150.5 million for the six months ended
Revenue was down 6%, or $58.2 million, to $973.1 million from
more than a $1 billion in the previous corresponding period.
Earnings before interest and tax were down 54%, or $73.9
million, to $62.8 million, and reported earnings were down
72%, or $51 million, to $19.7 million from $70.8 million in
However, the company approved an interim dividend of $64
million to be paid to the Government, up from $57 million in
Craigs Investment Partners broker Chris Timms was surprised
by the size of the dividend being paid. The dividend was up
12% on the pcp despite operating earnings being down 23%.
The balance sheet showed operating cash flow fell 24% in the
period but total non-current liabilities rose 23% to nearly
Genesis Energy may struggle to find investor support
without substantial share discounting. Photo supplied.
''They will have their reasons but I am surprised about
the amount of dividend being paid when it may have been better
to pay down some debt.''
The partial float of the company could reap the Government up
to $1 billion and he expected the float to occur before May,
Mr Timms said. The performance of Meridian Energy and Mighty
River Power would be taken into account when pricing the
''I suspect the Government will have to discount because,
first, the options investors have in the sector and, second,
the performance of Mighty River Power. In the scheme of
things, Meridian has performed quite well. It has traded as
high as $1.12, down to 91c and is trading now at $1.01.
Dividend support will be a massive thing to get Genesis ahead
and to do that, the Government will have to discount,'' Mr
Genesis had a large retail base and that would be reflected
in who might be interested in investing.
Investors had to look at the stock as one to hold long term
for income, not something to flick off on the first day, he
The electricity sector was at the bottom of its earnings
cycle and within the next three to five years, demand would
catch up with supply and the sector would be sought-after by
investors, Mr Timms said.
Genesis chairwoman Dame Jenny Shipley tried to put a positive
spin on the results, while admitting external operating
conditions were challenging.
''The company has held its market share in electricity and
gas retailing, despite intense competition, particularly from
smaller retailers, and has grown customer accounts by 2%.
''The New Zealand market is competitive and dynamic.''
When the one-off costs over the first half-year were taken
into account, the board believed the company was responding
well to the commercial challenges it faced and was confident
in its ability to pay an interim dividend of $64 million, she
The prospective float was not mentioned in Dame Jenny's