Genesis Energy Earnings: Soft Result as Expected; Improvement Likely in the Near Term

Narrow-moat-rated Genesis Energy reported fiscal 2024 EBITDA of NZD 407 million, down 22% on the prior year’s record performance, close to our expectations. Earnings were hurt by gas supply issues, lower hydroelectric output amid drier weather, and a seven-month unplanned outage of one of the units at the Huntly power station. Guidance for EBITDA of NZD 460 million in fiscal 2025 is 3% above our prior expectations. We expect growth to be driven by better power station availability, retail price increases, and cost-out initiatives. We bring our fiscal 2025 forecast in line with guidance, but our longer-term forecasts are mostly unchanged. Our NZD 2.50 per share fair value estimate stands, and at current prices, the stock screens as slightly undervalued.