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Ausnet Services Ltd shares sink lower on FY18 results

Victoria-based electricity and gas company Ausnet Services Ltd (ASX: AST) released its FY18 result on Monday, posting net profit after tax up 14% on the previous year to $291 million.

All key financial metrics improved: EBITDA grew 6% to $1.14 billion, and cash flow from operations increased nearly 20% to $886 million.

Ausnet’s main source of revenue, electricity distribution, performed well, with earnings up 15% thanks to higher customer contributions and lower operating costs.

The company refocused its commercial energy services division, which provides metering and energy data solutions to the utility and infrastructure sectors, moving away from low-margin maintenance services. This resulted in a 7% decline in the segment’s revenue, but ensured a 29% EBITDA margin, up 9% on FY17.

On the downside, the electricity transmission and gas distribution divisions saw a marginal decline in earnings.

The result failed to impress investors, and the stock closed 1% down to $1.72.

However, it was enough for the company to increase its total dividend by 5% to 9.25 cents per share. For FY19, Ausnet expects to increase its dividend to 9.72 cents per share, franked between 40% and 50%, resulting in a grossed up dividend yield of around 6.7% at the current share price.

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