APA (ASX:APA) share price on watch with HY21 report, upgrades distribution guidance

Infrastructure business APA Group (ASX:APA) has announced its FY21 half-year result. It also upgraded its FY21 distribution guidance.

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Energy infrastructure business APA Group (ASX: APA) has reported its FY21 half-year result.

APA FY21 half-year highlights

APA announced that its half-year revenue fell by 0.6% to $1.07 billion. It reported that there was strong volume growth in Western Australia, the Northern Territory and sectors of the east coast grid offset by softer contract renewals and lower energy consumption in Victoria.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 2.3% to $823 million. 

The business said that it made a loss after tax of $11.7 million including significant items. This includes a non-cash impairment recognised against the Orbost Gas Processing Plant of $174.5 million.

Net profit after tax (NPAT) excluding significant items was down 7% to $163 million. Operating cash flow was up 1.4% to $519 million due to favourable working capital movements.

APA boasted that it provided reliable operations during the period. It said that regarding its essential services delivery reliability, it achieved 99.92% against customer gas nominations. There was a successful major overhaul of the Diamantina Power Station despite COVID-19 constraints. The production from the Orbost Gas Processing Plant is improving from phase 2 works.


APA had already announced an interim distribution of 24 cents per security, amounting to a 4.3% increase compared to the prior corresponding period. It confirmed that distribution today. 

The energy infrastructure business announced that it was upgrading its FY21 distribution guidance to 51 cents per security, up 2% compared to FY20.

APA’s continued growth and refreshed strategy

The business said that organic growth capital expenditure is now expected to exceed $1 billion between FY21 and FY23. This builds on recent investments in the Northern Goldfields Interconnect and the Gruyere Hybrid Energy Microgrid.

APA also said that it will play a central role in supporting the federal government’s plans for a gas-led economic recovery, with a staged expansion of the east coast grid the fastest and most efficient way to address forecast 2024 shortfalls. Early engineering work is already underway.

The business said that it’s well positioned where it has or is rapidly developing capability, including renewables, firming, storage and electrification. It’s also pursuing opportunities in adjacent energy markets such as hydrogen, off-grid renewables and storage. This will be a key part of its efforts to support a lower carbon future.

It has an ambition to achieve net zero operations emissions (scope 1 and scope 2) by 2050.

APA continues to assess attractive energy infrastructure opportunities in North America. Factors such as COVID-19 and the US federal election resulted in a number of opportunities being put on hold during 2020. More activity is expected in 2021 as conditions normalise.

FY21 guidance and outlook

APA reaffirmed its guidance that FY21 underlying EBITDA is expected to be in a range of between $1.625 billion and $1.665 billion. The net interest expense is expected to be in a range of $490 million to $500 million.

The CEO and managing director of APA, Rob Wheals, said:

We have a significant pipeline of energy infrastructure growth opportunities that align with our purpose, vision and strategy. Our organic growth pipeline is healthy and we now expect to exceed $1 billion of growth capex over the FY21-FY23 period. Further development of new technology projects under APA’s Pathfinder Program will ensure APA can play a leading role in the energy transition.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of APA Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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