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Genesis Energy lifts 1H pretax earnings by 15%, selling more electricity, gas to fewer customers

Genesis Energy, New Zealand's largest energy retailer, posted a 15 percent gain in first-half pretax earnings as it lifted sales of electricity and gas even as it shed customers in an "aggressive" market. The company said it faces "headwinds" in achieving its full-year earnings forecast.

Earnings before net finance expense, income tax, depreciation, depletion, amortisation, impairment, fair value changes and other gains and losses rose to $172.8 million in the six months ended Dec. 31, from $150.6 million a year earlier. Net profit more than tripled to $68.2 million including favourable fair value adjustments. Total sales climbed to $1.1 billion from $973 million.

The government completed its asset sales programme with the sale of 49 percent of Genesis at $1.55 a share last April and the stock has been a stand-out performer since then, handing investors who participated in the initial public offering a 46 percent gain. The Auckland-based company today announced a 25 percent increase in first-half dividend to 8 cents a share and said it would meet full-year guidance for total dividends of 16 cents.

The company was on track to meet or exceed its IPO forecast of full-year profit of $95.4 million but was "facing headwinds on achieving its 2015 Ebitdaf PFI forecast due to lower international oil prices and continued aggressive retail competition." That would be offset by cuts to operating costs and improved wholesale electricity prices, it said.

"Genesis Energy expects that the current competition for customers in the retail electricity and gas markets will continue through 2015, with elevated switching rates and retailers willing to compete aggressively on price and with bundled products in targeted regions," chief executive Albert Brantley said in the statement.

"While there was strong competition for energy customers during the half year and this impacted our total customer accounts, our focus on volume sales ensured a strong revenue and Ebitdaf performance," he said.

Electricity sales, the company's biggest source of revenue, rose to $869.6 million from $809 million, even as total electricity customers fell 3.2 percent to 517,492 and total sales by gigawatt hours declined 0.9 percent to 2,825. Gas customers declined 6.4 percent to 108,217, although retail gas sales climbed 29 percent to 4 petajoules and total revenue from gas jumped to $155.8 million from $117.7 million.

LPG customers rose about 22 percent to 13,081 and LPG sales in tonnes jumped 21 percent to 1,944. Total customer accounts fell 3.4 percent to 638,790.

Genesis said the average retail electricity purchase price declined 34 percent to $72.45 per megawatt hour.

Total generation in the first half declined 2 percent to 3,280 GWh, which the company said reflected lower hydro generation as water was conserved in the latter part of the half year. Thermal generation rose 2 percent to 1,918 GWh.

Genesis Energy's share of oil sales from the 31 percent stake in the Kupe oil and gas field fell 9 percent to 233,352 barrels, while gas output was down 2 percent and LPG sales were flat at 15,184 tonnes.