APA share price dips despite $1.4b growth pipeline

APA Group posted its FY22 earnings this morning.

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Key points

  • APA Group posted its earnings today
  • Revenue and free cash flow gained, but net profit narrowed
  • In the last 12 months, the APA share price has gained roughly 16%

The APA Group (ASX: APA) share price is rangebound from the open on Wednesday following the release of the company's FY22 results.

At the time of writing, APA shares are 1.52% in the red at $11.37 apiece.

APA grows top line, profit down

Key takeouts from the period include:

  • Revenue growth of 4.3% year on year, recognising $2.23 billion at the top line
  • Full-year underlying EBITDA up 3.9% to $1.7 billion from $1.629 billion in FY21
  • Free cash flow (FCF) growth of 19.8%, realising $1.01 billion in FCF for the year
  • Reported net profit after tax (NPAT) of $240 million, down 13.9% year on year
  • FY22 distribution of 53 cents per security, up 3.9% year on year

What else happened in FY22 for APA?

APA advanced a number of projects last financial year, investing over $500 million in growth projects across the period.

It invested $270 million to progress the stage 1 and 2 expansion of the East Coast Grid alongside the $460 million Northern Goldfields interconnect, Mica Creek Solar Farm.

The APA board also approved a 28 cents per security dividend. This brings the FY22 APA dividend to 53 cents, a 4% increase from FY21.

APA also reports it has advanced "significant investments" in the renewable energy transition, boasting "an organic growth pipeline in excess of $1.4 billion".

Management commentary

Speaking on the announcement, APA CEO Rob Wheals said:

APA has delivered another solid result in a year that has highlighted the critical role that APA's gas transmission assets play in delivering energy security to Australians when it is needed most.

Gas power generation and APA's existing gas infrastructure has stepped up to help fill the electricity supply gap across Australia's east coast, underscoring the critical role that gas and gas infrastructure will play as the energy transition accelerates, including as the perfect complement to firm renewable generation.

What's next for APA?

The group forecasts a 3.8% increase in its dividend payment in FY23, projecting a total payment of 55 cents per share.

It also noted it has a number of new projects underway across gas transmission and renewable energy generation.

The company also clarified its view on emissions looking ahead:

Introduction of 2030 interim climate commitments to reduce emissions by 30% in gas transmission, reduce emissions intensity by 35% in power generation and implement an active program to reduce emissions [APA] can control in electricity transmission.

APA Group share price snapshot

In the last 12 months, the APA share price has gained roughly 16%, or 15% this year to date.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended APA Group. 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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