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FIRST CUT: Genesis first-half earnings gain

FIRST CUT: Genesis first-half earnings gain as dry summer boosts wholesale unit, Kupe beds in

Feb. 14 (BusinessDesk) - Genesis Energy lifted first-half earnings 28 percent as low hydro-lake levels in the South Island boosted the company's demand for wholesale electricity.

Earnings before interest, tax, depreciation, amortisation, and fair value adjustments, the favoured measure of power companies, rose to $199.5 million in the six months ended Dec. 31 from $155.7 million a year earlier, the Auckland-based company said in a statement. Revenue climbed 26 percent to $1.21 billion. That was largely in line with Forsyth Barr analyst Andrew Harvey-Green's forecast for ebitdaf of $195.2 million on sales of $1.13 billion.

Net profit dropped 24 percent to $28.4 million, or 2.84 cents per share, as depreciation, depletion and amortisation costs jumped about 41 percent to $103.5 million and the fair value of financial instruments posted a loss of $19.7 million, turning around a gain of $1.9 million in the year-earlier period.

Genesis's wholesale division lifted earnings 29 percent to $106.4 million, the biggest contribution to the group, while Kupe contributed earnings of $55.7 million, a gain of 75 percent from the prior period.

"Wholesale performance was very strong for the half year with record wholesale prices for November and December and higher than average generation," chief executive Marc England said. "As expected the swaption agreements we have with other companies were called on during this period."

New Zealand's spring and summer months left hydro-lakes in the South Island at levels below average, meaning Meridian Energy and Contact Energy were more reliant on the wholesale market than their rivals with North Island hydro-storage.

Genesis's board declared an interim dividend of 8.3 cents per share, payable on April 20 with an April 6 record date. That's up fro 8.2 cents a year earlier.

The company narrowed annual ebitdaf guidance to between $350 million and $360 million from an earlier forecast range of $345 million-to-$365 million. It reported ebitdaf of $333 million in 2017.

The shares last traded at $2.38 and have gained 10 percent over the past year.


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