Genesis share price rises on solid FY 2020 results

The Genesis share price is up today, after the energy company posted solid full year results in spite of challenging conditions.

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The Genesis Energy Ltd (ASX: GNE) share price is on the move today, after the New Zealand energy company reported strong FY2020 results. The Genesis share price is currently up by 3.09% to $2.67 at the time of writing.

How did Genesis perform in FY 2020?

Genesis delivered earnings of $356 million despite challenging market conditions due to the pandemic. This represented a 4% decrease on earnings in FY 19. Throughout the year, Genesis flexed its portfolio of fuels and generation assets to ensure a solid result during a year of exceptionally dry North Island conditions. 

Genesis Energy today announced that it delivered net profit after tax of $46 million, with underlying earnings of $53 million. This represented a 22% and 17% decline, respectively.

Retail was the best performing segment as Genesis continued its momentum from the first half, backed by increased uptake of digital products and promotions. Examples of this include its Power Shout product, which saw a record 141,000 customers participate in May. Genesis now has 121,000 dual fuel customers, an increase of 3%. In contrast, the wholesale segment underperformed. It was impacted by the dry conditions lowering renewable generation and replacing it with thermal generation at higher fuel costs.

As such, hydro generation fell by 491 GWh versus the year prior. This means that Huntly Power Station's back-up generation was called upon more regularly to stabilise wholesale electricity prices for Genesis's customers, incurring higher costs for the company.

The company was happy as its "business strategy has been thoroughly stress tested this year and has performed under the challenging conditions."

Final dividend and a dividend reinvestment plan

The Genesis board has declared a final dividend of 8.675 cents per share. This means that the total FY20 dividend comes in at 17.20 cents per share, a 1% increase over FY19. The company is continuing to offer its dividend reinvestment program, which offers shareholders a 2.5% discount.

FY21 guidance and Genesis share price

Genesis continues to target the strategic goal of $400+ million EBITDAF in FY21. As such, the company's guidance is $395 million to $415 million. This is, of course, subject to hydrological conditions and any other unforeseen circumstances. In terms of capital expenditure, the company noted that it may spend up to $95 million, well above its long run target of between $50 to $70 million.

The Genesis share price is up by more than 3% today, but remains 14.92% down on this time last year.

Motley Fool contributor Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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