Release Date: August 21, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Genesis Energy Ltd (ASX:GNE, Financial) successfully delivered all Gen35 strategic objectives for FY24, demonstrating resilience despite challenging conditions.
- The company achieved a 2.7% growth in customer base, showcasing strong brand stability and market presence.
- Genesis Energy Ltd reached financial close for the Lauriston Solar farm, marking a significant step in renewable energy development.
- The company maintained high employee engagement, with scores 6% above New Zealand's benchmark, even amidst structural changes.
- Genesis Energy Ltd's retail business saw improved netback across all segments, with high customer satisfaction and award-winning service.
Negative Points
- EBITDAF decreased by 22% compared to FY23, reflecting the impact of lower hydro generation and gas market challenges.
- Net profit after tax (NPAT) was down to $130 million, influenced by higher operating costs and lower gross margins.
- The company faced significant unplanned outages and a challenging gas market, impacting overall performance.
- Genesis Energy Ltd's reliance on coal increased due to gas shortages, leading to higher emissions and missing FY25 science-based targets.
- The KS-9 drilling campaign outcome was disappointing, affecting the company's gas production and financial performance.
Q & A Highlights
Q: Can you elaborate on the impact of the gas shortage on Genesis Energy's operations and how the company plans to address this issue?
A: Malcolm Johns, CEO: The gas shortage has significantly impacted our operations, leading to increased reliance on coal for energy security. We are exploring options for gas storage and have secured additional gas supply agreements. We are also investigating biomass as a long-term solution to replace coal and improve energy security.
Q: What are the key drivers behind the decrease in EBITDAF and NPAT for FY24?
A: Emma Oettli, Interim CFO: The decrease in EBITDAF and NPAT is primarily due to lower hydro generation, challenging gas market conditions, and unplanned outages. These factors led to higher generation costs and lower gross margins compared to the previous year.
Q: How is Genesis Energy progressing with its renewable energy projects, and what are the future plans?
A: Malcolm Johns, CEO: We have made significant progress with our renewable projects, including the Lauriston Solar farm and the Huntly battery program. We plan to expand our solar capacity with the Edgecumbe project and continue to develop our renewables pipeline through partnerships and acquisitions.
Q: Can you provide more details on the Huntly battery project and its expected impact on Genesis Energy's operations?
A: Malcolm Johns, CEO: The Huntly battery project is a key component of our strategy to enhance energy security. The first stage involves a 100 megawatt battery, with commercial operations expected by mid-2026. This will provide flexibility and optimize our solar portfolio, contributing to an estimated EBITDAF of $25 million per annum.
Q: What measures is Genesis Energy taking to manage operating costs and improve efficiency?
A: Emma Oettli, Interim CFO: We are focusing on strategic investments in digital projects and renewable growth while implementing a new target operating model to reduce costs. We expect to see the full-year impact of these changes in FY25, with a decline in operating costs through to FY28.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
