Genesis Energy reports 125% profit rise

State-owned gas and electricity company Genesis Energy has reported a 125% increase in first-half net profit, reflecting increasing earnings from its share of the Kupe oil and gas field, the addition of new hydro stations and higher wholesale power prices.

Tax-paid profit for the first half came to $38.3 million, compared with a total of $17 million in the same period a year earlier.

Earnings before interest, tax, depreciation, amortisation and changes in the value of financial instruments (EBITDAF) were up 27% to $190.5 million.

It’s retail business however, showed flat earnings despite a 2% increased in total customer numbers to 669,138, making Genesis Energy by far the country’s leading energy retailer.

EBITDAF for the customer segment resulted in $25.6 million on sales of $629 million, compared with earnings of $23.1 million on $630 million of sales made in the same period a year earlier.

Genesis Energy chief executive, Albert Brantley, said gains in the number of customers for the company and increased sales of LPG were offset by a lower demand in energy, in the management discussion of the result.

The company continued to grow its South Island customer base, which almost doubled to 60,714 customers compared with December 2010, reflecting its purchase of the Tekapo A and B hydro stations on the Waitaki River as part of government-ordered electricity reforms, he said.

North Island’s electricity customer base shrank 3.9% to 493,139, partly reflecting tough competition and the impact of the Electricity Authority’s customer switching campaign.

However, its take-or-pay contracts for Kupe gas also meant the company paid $65.4 million for natural gas, which it sold customers at a net loss of $2.2 million.

“We continue to sell surplus gas contracted… at a loss, given it is more cost effective than using it for generation,” added Brantley.

While coal sales saw “other revenue” rise to $10 million from $3 million in the same period a year before, coal stockpiles increased from 1.3 million to 1.5 million tonnes, “reflecting long term supply agreements and a relatively lower coal burn than prior periods.”

Genesis confirmed the first of its four older 250 megawatt units at Huntly will go into storage at the end of 2012 in December with a second unit scheduled for removal from service in December of 2014.

No dividend was declared by the energy company for the half-year.