Genesis Energy reported a 14% increase in operating earnings for the year ending June, driven by strong retail margins and favourable hydroelectric conditions. The New Zealand state-owned company posted earnings before interest, tax, depreciation, amortisation and fair value adjustments on derivatives (EBITDAF) of $518 million, up from the previous year.
Despite this growth, the company’s net profit declined to $85 million from $169 million in 2025. This reduction reflected the impact of marking to market the value of its energy and financial derivatives at balance date, which affects reported net income but not underlying operating performance.
Genesis recorded its highest gross margin to date at $949 million, supported by improved retail margins alongside beneficial hydro generation. The company operates the Huntly Power Station, which provides thermal generation capacity to complement its predominantly hydro and wind-based electricity assets. According to Genesis, advances in renewable generation and active fuel management have reduced reliance on thermal generation, lowering the average cost of electricity generation to approximately $61 per megawatt hour.
Looking ahead to the 2027 financial year, Genesis forecasts normalized EBITDAF in the range of $480 million to $520 million, assuming typical hydrological conditions, stable gas supply, reliable plant performance, and no significant adverse events. Beyond 2027, the company anticipates EBITDAF reaching the upper $500 million range by fiscal year 2028, supported by margin enhancements, disciplined cost and capital management, operational efficiencies, new renewable projects, and an expanded role for Huntly in providing flexibility to the electricity system amid increasing renewable penetration.
Chief Executive Malcolm Johns highlighted ongoing investment plans, including approximately $3 billion over the next five years to enhance products, services, and generation assets, with a focus on renewable energy, battery storage, and technological innovation. He emphasized progress in refining earnings quality, cost control, and capital discipline to support sustainable growth.
Genesis increased its final dividend to 7.58 cents per share, resulting in a total dividend for the year of 14.88 cents per share, a 4% increase from the prior year.
The company noted a soft finish to the financial year due to a warmer-than-average start to winter but described the full-year result as solid. Its retail division continued to report losses, with an EBITDAF loss of $128.5 million, widening from $108 million the previous year. Johns explained the retail losses have been a strategic choice to absorb high wholesale electricity prices rather than pass these costs onto customers during 2024 to 2026.
On future demand, Johns identified data centres as a potential asset for managing electricity demand, citing their ability to provide backup power during critical periods such as cold winter mornings and nights. He stressed that while data centres have been problematic in other countries, New Zealand has an opportunity to integrate them effectively into the electricity system.
Separately, Genesis approved a $125 million investment to develop the Leeston solar farm in Canterbury. Construction is scheduled to begin by the end of the year, with the project expected to enter generation phase in 2028.