Full Year 2026 Genesis Energy Ltd Earnings Call
Speaker #1: Thank you for standing by, and welcome to Genesis Energy’s full-year results for the 2026 Analyst Briefing. All participants are in listen-only mode. There will be a presentation, followed by a question-and-answer session.
Operator: Thank you for standing by, and welcome to Genesis Energy Full Year Results for the 2026 analyst briefing. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Malcolm Johns, Chief Executive Officer. Please go ahead.
Speaker #1: If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to turn the conference over to Mr. Malcolm Johns, Chief Executive Officer.
Speaker #1: Please go ahead.
Speaker #2: Kodakoto. Naamihi i Kitomana Fenuwa. Welcome, everybody, and thank you for your time. It is a pleasure to be here today to talk you through our FY26 results.
Malcolm Johns: Welcome everybody, and thank you for your time. It is a pleasure to be here today to talk you through our FY26 results. My name is Malcolm Johns, Chief Executive of Genesis, and I am pleased to be joined today by Emma Oettli, our CFO, and Michael Hunter, our GM Investor Relations. I would also like to introduce you to the wider executive team doing an awesome job. Claire Walker, our Chief People Officer, has worked hard to strengthen our leadership bench through a combination of building and buying talent, setting up strong internal succession lines. Stephen England-Hall, our Chief Revenue Officer, leads our trading portfolio and customer teams, driving commercial performance and customer value to a strong result in this past year. He also led the final stages of our move to a single repositioned Genesis brand which went live in August. Matthew Osborne is our Chief Corporate Affairs Officer.
Speaker #2: My name is Malcolm Johns, Chief Executive of Genesis, and I'm pleased to be joined today by Emma Oertley, our CFO, and Michael Hunter, our GM of Investor Relations.
Speaker #2: I'd also like to introduce you to the wider executive team, who are doing an awesome job. Claire Walker, our Chief People Officer, has worked hard to strengthen our leadership bench through a combination of building and buying talent.
Speaker #2: Setting up strong internal succession lines. Stephen England-Hall, our Chief Revenue Officer, leads our trading portfolio and customer teams, driving commercial performance and customer value to a strong result in this past year.
Speaker #2: He also led the final stages of our move to a single, repositioned Genesis brand, which went live in August. Matthew Osborne is our Chief Corporate Affairs Officer—a busy year with a number of regulatory and policy matters in play.
Malcolm Johns: A busy year with a number of regulatory and policy matters in play. Ed Hyde, our Chief Technology and Transformation Officer, delivering our three major platform upgrades on time and within budget. Tracey Hickman, our Chief Operating Officer, excellent execution of existing asset upgrades and delivery of our pipeline of new renewable generation. Every part of our business is delivering our strategy well, and you will see the proof points as we talk through our FY26 results and then look out to FY28 and FY32. On the screen now is today's agenda. We will spend about 20 minutes talking through FY26 before touching on our outlook to 2028 and 2032, and then moving to your questions. Our strategy remains Gen35, and we are delivering Horizon Two, the period out to FY32 or what we call the FY32 Growth Plan.
Speaker #2: Ed Hyde, our Chief Technology and Transformation Officer, delivered our three major platform upgrades on time and within budget. Tracy Hickman, our Chief Operating Officer, executed existing asset upgrades excellently and delivered our pipeline of new renewable generation.
Speaker #2: Every part of our business is delivering our strategy well. You will see the proof points as we talk through our FY26 results, and then look out to FY28 and FY32.
Speaker #2: On the screen now is today's agenda. We will spend about 20 minutes talking through FY26 before touching on our outlook for '28 and '32, and then move to your questions.
Speaker #2: Our strategy remains Gen 35, and we are delivering Horizon 2—the period out to FY32, or what we call the FY32 Growth Plan. At Genesis, we believe electricity is the solution to New Zealand's energy challenge.
Malcolm Johns: At Genesis, we believe electricity is the solution to New Zealand's energy challenge. It is efficient, it is increasingly renewable, and because it is made in New Zealand, it provides greater energy security and independence. However, today it only makes up around 30% of New Zealand's total annual energy. 70% comes from fossil fuels. As we have seen since the Iran conflict began, this can have a material impact on the total energy costs for Kiwi homes and businesses. If electricity made up 60% of New Zealand's total annual energy today, the average household would save up to NZD 3,000 per annum on their total energy costs. Or New Zealand's total annual energy bill would be around NZD 10 billion a year less than it is today. This is why our vision is a country that lives Life at Full Power.
Speaker #2: It's efficient, it's increasingly renewable, and because it's made in New Zealand, it provides greater energy security and independence. However, today it only makes up around 30% of New Zealand's total annual energy.
Speaker #2: Seventy percent comes from fossil fuels, and as we have seen since the Iran conflict began, this can have a material impact on the total energy costs for Kiwi homes and businesses.
Speaker #2: If electricity made up 60% of New Zealand's total annual energy today, the average household would save up to $3,000 per annum on their total energy costs.
Speaker #2: Or New Zealand's total annual energy bill would be around $10 billion a year less than it is today. This is why our vision is a country that lives life at full power.
Speaker #2: Homes, businesses, and our country leveraging our natural, renewable electricity advantage to thrive at full power for this generation and the generations that come after us.
Malcolm Johns: Homes, businesses, and a country leveraging our natural, renewable electricity advantage to thrive at full power for this generation and the generations that come after us. Achieving this is about the electrification of transport and heat. This will not only lower the total cost of energy for our customers, it will also grow demand for our products and services. As a sector, we must deliver the 60/95/100 formula. 60% electrification of New Zealand's total energy, at least 95% renewable generation, and electricity that is available 100% of the time, regardless of the weather or customer demand outcomes. For Genesis, Gen35 is about growing customer demand for electricity through electrification, reducing average generation costs from increased renewable generation investment, and energy security and flexibility from Huntly Power Station. For our investors, we are focused on embedding three commercial foundations in our culture: margin quality, cost discipline, and strong capital management.
Speaker #2: Achieving this is about the electrification of transport and heat. This will not only lower the total cost of energy for our customers, it will also grow demand for our products and services.
Speaker #2: As a sector, we must deliver the 60/95/100 formula: 60% electrification of New Zealand's total energy, at least 95% renewable generation, and electricity that is available 100% of the time.
Speaker #2: Regardless of the weather or customer demand outcomes, for Genesis, Gen 35 is about growing customer demand for electricity through electrification, reducing average generation costs from increased renewable generation investment, and ensuring energy security and flexibility from Huntley Power Station.
Speaker #2: For our investors, we are focused on embedding three commercial foundations in our culture: margin quality, cost discipline, and strong capital management. Gen 35—Life at Full Power—delivers for our customers, our investors, and for our country.
Malcolm Johns: Gen35, Life at Full Power, delivers for our customers, our investors, and for our country. Can I now hand to Emma to talk you through FY26? Emma.
Speaker #2: Can I now hand over to Emma to talk you through FY26? Emma.
Speaker #3: Thanks, Malcolm. And Kira, everyone. FY26 provides a number of important proof points that Gen 35 is translating into financial outcomes. At the heart of our strategy, we are focused on three commercial disciplines.
Emma Oettli: Thanks, Malcolm, and kia ora everyone. FY26 provides a number of important proof points that Gen35 is translating into financial outcomes. At the heart of our strategy, we are focused on three commercial disciplines: margin quality, cost discipline, and strong capital management. On margin quality, group gross margin increased to NZD 949 million, our strongest result to date, reflecting improved customer netback and lower generation cost. On cost discipline, cost to serve reduced as planned, and investment within our Big Rock program remains within the overall NZD 145 million program envelope. On capital management, the March equity raise materially strengthened our balance sheet and provides capacity to fund the next stage of our growth program while retaining investment-grade credit metrics. Together, these highlights demonstrate tangible progress in executing Gen35.
Speaker #3: Margin quality, cost discipline, and strong capital management. On margin quality, group gross margin increased to $949 million—our strongest result to date—reflecting improved customer netback and lower generation. Discipline, cost to serve reduced as planned, and investment within our big rock program remains within the overall $145 million program envelope.
Speaker #3: And on capital management, the March equity raise materially strengthened our balance sheet and provides funding capacity to support the next stage of our growth program, while retaining investment-grade credit metrics.
Speaker #3: Together, these highlights demonstrate tangible progress in executing Gen 35. I'll now take you through our FY26 business performance and the progress we've made across customer, renewables, Huntley, and our Big Rocks technology program.
Emma Oettli: I'll now take you through our FY26 business performance and the progress we've made across customer, renewables, Huntly, and our Big Rocks technology program. In customer, our strategy over the past 18 months has deliberately prioritized value over volume to support margin quality and cost discipline. We have repositioned the portfolio while simplifying our brands, products, and operating model. This did result in lower customer numbers during FY26, but the economic outcome was strong. Electricity netback increased to around NZD 176 per megawatt hour. Cost to acquire reduced materially, and cost to serve also declined. At the same time, we continue to build higher value relationships around electrification. EV plan connections increased, rooftop solar connections grew, and flexible customer demand reached 58 megawatts. The final stage of our move to a single brand strategy was completed in Q4, and since June, ICPs have returned to growth.
Speaker #3: In Customer, our strategy over the past 18 months has deliberately prioritized value over volume to support margin quality and cost discipline. We have repositioned the portfolio while simplifying our brands, products, and operating model.
Speaker #3: This did result in lower customer numbers during FY26, but the economic outcome was strong. Electricity netback increased to around $176 per megawatt hour.
Speaker #3: Cost to acquire was reduced materially, and cost to serve also declined. At the same time, we continue to build higher-value relationships around electrification. EV plan connections increased.
Speaker #3: Rooftop solar connections grew, and flexible customer demand reached 58 megawatts. The final stage of our move to a single brand strategy was completed in the fourth quarter, and, since June, ICPs have returned to growth.
Speaker #3: The important point is that we are targeting profitable customer growth that supports both margin quality and cost discipline. Alongside customer growth, we are investing to structurally lower the cost of our generation portfolio.
Emma Oettli: The important point is we are targeting profitable customer growth that supports both margin quality and cost discipline. Alongside customer, we are investing to structurally lower the cost of our generation portfolio. Our FY32 Growth Plan targets more than 2 terawatt-hours of additional renewable generation, allowing us to progressively displace higher cost base load thermal generation. During FY26, Tihori Solar Farm moved into construction, and today we are pleased to announce the final investment decision for the Leeston Solar Farm in Canterbury. Lauriston completed its first full year of operation, and we have also secured additional geothermal supply from Ngāwhā from 2029, further strengthening and diversifying our renewable supply. We continue to progress a broader pipeline across wind and solar. Investment decisions remain subject to our capital management framework. They need to improve portfolio economics and meet our target returns.
Speaker #3: Our FY32 growth plan targets more than two terawatt-hours of additional renewable generation, allowing us to progressively displace higher-cost baseload thermal generation. During FY26, Tohori Solar Farm moved into construction.
Speaker #3: And today, we are pleased to announce the final investment decision for the Leeston Solar Farm in Canterbury. Lauriston completed its first full year of operation, and we've also secured additional geothermal supply from NAFA from 2029.
Speaker #3: Further strengthening and diversifying our renewable supply. We continue to progress a broader pipeline across wind and solar. Investment decisions remain subject to our capital management framework.
Speaker #3: They need to improve portfolio economics and meet our target returns. As our renewable portfolio grows, Huntly continues to evolve alongside it. We're positioning Huntly for the future needs of Genesis, transitioning away from baseload gas generation by around FY29 or earlier, adding Huntly firming options, increasing our asset-backed trading activity, and firming Genesis customer needs.
Emma Oettli: As our renewable portfolio grows, Huntly continues to evolve alongside it. We are positioning Huntly for the future needs of Genesis, transitioning away from baseline gas generation by around FY29 or earlier, adding Huntly Firming Options, increasing our asset-backed trading activity, and firming Genesis customer needs. Based on current market conditions and assuming no major outages or significant regulatory change, we are confident that Huntly, together with our hydro assets, can provide all the flexibility, firming, and peaking capacity Genesis will need to grow securely for the foreseeable future. We see Huntly centered around our new batteries, three upgraded Rankine units, and our fast start peaker. We retained the option for a second fast start peaker, although there is no commercial case for that investment today. Those assets will be supported by diversified fuels of coal, gas, and diesel, with biomass remaining an option as economics improve into the 2030s.
Speaker #3: Based on current market conditions, and assuming no major outages or significant regulatory change, we're confident that Huntley, together with our hydro assets, can provide all the flexibility, firming, and peaking capacity Genesis will need to grow securely for the foreseeable future.
Speaker #3: We see Huntley centered around our new batteries, three upgraded ranking units, and our fast-start peaker. We retain the option for a second fast-start peaker, although there is no commercial case for that investment today.
Speaker #3: Those assets will be supported by diversified fuels of coal, gas, and diesel, with biomass remaining an option as economics improve into the 2030s. Should imported gas become an option, fuel pricing will determine which fuels are dispatched at what times.
Emma Oettli: Should imported gas become an option, fuel pricing will determine which fuels are dispatched at what times. We continue to engage on gas storage. However, while this may be helpful, it is not fundamental to delivering our FY32 Growth Plan. We plan to continue contracting minimum levels of take-or-pay gas, except where price and volume is commercially attractive. As we have done over recent years, we will continue to leverage our fuel diversity alongside the wholesale electricity market and tactical short-term gas contracts to drive margin quality. Unit Five is a large, well-maintained generation asset. However, its size and minimum operating range of 180 megawatts makes it increasingly challenging to see a commercial case to support it once baseline gas generation is displaced. We have been clear since we launched Gen35 in FY24 that we will only maintain assets with clear and reliable commercial business cases.
Speaker #3: We continue to engage on gas storage. However, while this may be helpful, it is not fundamental to delivering our FY32 growth plan. We plan to continue contracting minimum levels of take-or-pay gas, except where price and volume are commercially attractive.
Speaker #3: As we have done over recent years, we will continue to leverage our fuel diversity, alongside the wholesale electricity market and tactical short-term gas contracts, to drive margin quality.
Speaker #3: Unit five is a large, well-maintained generation asset. However, its size and minimum operating range of 180 megawatts make it increasingly challenging to see a commercial case to support it once baseload gas generation is displaced.
Speaker #3: We have been clear since we launched Gen 35 and FY24 that we will only maintain assets with clear and reliable commercial business cases. Over the next 12 months, we will be undertaking a review of Unit Five’s commercial future; all options will be considered, including offshore sale.
Emma Oettli: Over the next 12 months, we will be undertaking a review of Unit Five's commercial future. All options will be considered, including offshore sale. Finally, a quick update on our technology program. As we set out at our 2024 Investor Day, we are delivering three major technology programs: a new billing and CRM system, a new financial management system, and a new electricity trade and risk management platform. These are complex programs, but we remain on track to complete them by the end of FY27 within a total cash envelope of NZD 145 million. Turning now to our group financial performance. FY26 delivered strong earnings, strong cash generation, and a stronger balance sheet, reflecting the disciplined execution I have discussed. In FY26, we delivered our strongest gross margin to date, up 10% on the prior year, reflecting improvement in margin quality in our customer book and lower generation cost.
Speaker #3: Finally, a quick update on our technology program. As we set out at our 2024 Investor Day, we're delivering three major technology programs: a new billing and CRM system, a new financial management system, and a new electricity trade and risk management platform.
Speaker #3: These are complex programs, but we remain on track to complete them by the end of FY27 within a total cash envelope of $145 million.
Speaker #3: Turning now to our group financial performance. FY26 delivered strong earnings, strong cash generation, and a stronger balance sheet, reflecting the disciplined execution we discussed.
Speaker #3: In FY26, we delivered our strongest gross margin to date, up 10% on the prior year, reflecting improvement in margin quality in our customer book and lower generation cost.
Speaker #3: This translated into reported EBITDAF of $518 million and normalized EBITDAF of $522 million, while also funding around $56 million of operating expenditure associated with our Big Rock technology investment and single brand strategy.
Emma Oettli: This translated into reported EBITDAF of NZD 518 million and normalized EBITDAF of NZD 522 million, while also funding around NZD 56 million of operating expenditure associated with our Big Rock technology investment and single brand strategy. Looking at the NZD 85 million increase in gross margin, the two largest drivers were improved margin quality in our customer book and lower generation cost as a result of increased hydro and a full year of Tahara and Lauriston. Market conditions provided less opportunity to add value through links. That lower contribution was partly offset by Huntly firming option premiums in the second half. On operating expenditure, normalized OpEx increased NZD 16 million to NZD 377 million. The increase reflects wage inflation, technology support, a full year of Ecotricity OpEx, and NZD 5 million associated with the single brand strategy. Note, there has been a NZD 15 million reclassification of metering costs to gross margin during the year.
Speaker #3: Looking at the $85 million increase in gross margin, the two largest drivers were improved margin quality in our customer book and lower generation cost as a result of increased hydro and a full year of Tahara and Lauriston.
Speaker #3: Market conditions provided less opportunity to add value through length. That lower contribution was partly offset by Huntley firming option premiums in the second half.
Speaker #3: On operating expenditure, normalized opex increased by $16 million to $377 million. The increase reflects wage inflation, technology support, a full year of Ecotricity opex, and $5 million associated with the single brand strategy.
Speaker #3: Note, there has been a $15 million reclassification of metering cost to gross margin during the year. As the major technology and single brand programs conclude in FY27, the focus increasingly shifts towards converting these investments into ongoing margin quality and productivity benefits.
Emma Oettli: As the major technology and single brand programs conclude in FY27, the focus increasingly shifts towards converting these investments into ongoing margin quality and productivity benefits. The operating result translated strongly into cash. Operating free cash flow was NZD 322 million, which is the equivalent of a 62% cash conversion ratio. Working capital was a positive contributor, including payments from counterparties supporting the strategic coal stockpile under our Huntly firming options. Our capital program remains balanced between maintaining the resilience of existing assets and investing in growth. Same business CapEx was NZD 119 million. This included investment in the Rankines as part of their Huntly Life Extension Program. This multi-year program supports the continued availability of Rankines through to FY35, consistent with the Huntly firming options.
Speaker #3: The operating result translated strongly into cash. Operating free cash flow was $322 million, which is the equivalent of a 62% cash conversion ratio. Working capital was a positive contributor.
Speaker #3: Including payments from counterparties supporting the strategic coal stockpile under our Huntly firming options. Our capital program remains balanced between maintaining the resilience of existing assets and investing in growth.
Speaker #3: Staying business capex was $119 million. This included investment in the Rankines as part of their Huntly life extension program. This multi-year program supports the continued availability of the Rankines through FY35, consistent with the Huntly firming options.
Speaker #3: Growth capex was $182 million, concentrated on solar development and BIS, which will progressively displace higher-cost thermal generation and structurally lower our long-term cost of generation.
Emma Oettli: Growth CapEx was NZD 182 million, concentrated on solar development and BESS, which will progressively displace higher cost thermal generation and structurally lower our long-term cost of generation. Our strong cash generation, together with the NZD 400 million equity raise, has materially strengthened the balance sheet. Net debt has reduced to approximately NZD 940 million, and our debt to EBITDA ratio has reduced to 1.6 times. This gives us the financial capacity to execute the FY32 Growth Plan while maintaining resilience through energy market cycles. The board has declared a final dividend of 7.58 cents per share, taking the full-year dividend to 14.88 cents per share. The board has set a fixed dividend policy through to FY28. We expect to provide an update on our dividend policy beyond FY28 at the FY27 half year results. Turning now to FY27.
Speaker #3: Our strong cash generation, together with the $400 million equity raise, has materially strengthened the balance sheet. Net debt has reduced to approximately $940 million, and our debt to EBITDAF ratio has reduced to 1.6 times.
Speaker #3: This gives us the financial capacity to execute the FY32 growth plan while maintaining resilience through energy market cycles. The Board has declared a final dividend of 7.58 cents per share, taking the full-year dividend to 14.88 cents per share.
Speaker #3: The Board has set a fixed dividend policy through to FY28. We expect to provide an update on our dividend policy beyond FY28 at the FY27 half-year results.
Speaker #3: Turning now to FY27. For FY27, we are guiding to normalized EBITDAF of $480 to $520 million, assuming P50 hydro, wind, and solar conditions. As always, guidance remains subject to hydrology, fuel availability, and plant reliability.
Emma Oettli: For FY27, we are guiding to normalized EBITDA of NZD 480 to NZD 520 million, assuming P50 hydro, wind, and solar conditions. As always, guidance remains subject to hydrology, fuel availability, and plant reliability. Our digital Big Rock program will conclude in FY27 with around NZD 45 million of final program spend. Stay in business CapEx is expected to increase to NZD 140 to NZD 150 million, reflecting the second year of the Huntly Life Extension Program. Growth investment is expected to be up to NZD 325 million, predominantly supporting battery and solar developments. I will now pass back to Malcolm to discuss the group outlook and closing remarks.
Speaker #3: Our Digital Big Rock program will conclude in FY27 with around $45 million of final program spend. Stay-in-business capex is expected to increase to $140 to $150 million, reflecting the second year of the Huntley Life Extension program.
Speaker #3: And growth investment is expected to be up to $325 million, predominantly supporting battery and solar developments. I’ll now pass back to Malcolm to discuss the group outlook and closing remarks.
Speaker #1: Thank you, Emma. A solid year with good proof points of our strategy delivery as we balance the needs of our customers and investors. We have balanced investment well between supporting better services and products for our customers and setting the business up for competitive returns and growth for our shareholders.
Malcolm Johns: Thank you, Emma. A solid year with good proof points our strategy delivery as we balance the needs for our customers and investors. We have balanced investment well between supporting better services and products for our customers, and to set the business up for competitive returns and growth for our shareholders. FY28 remains our target year for being clear of major technology investment. Current wholesale electricity prices present a potential near-term opportunity and risk. However, our outlook to FY28 continues to see credible pathways to EBITDA in the upper NZD 500 million range. That outlook is based on P50 generation assumptions, no major changes to regulatory or market settings, and no significant unplanned outages or fuel disruptions. Importantly, it reflects the continued benefits to our customers and investors from executing our strategy to deliver improved margin quality, cost discipline, and strong capital management.
Speaker #1: FY28 remains our target year for being clear of major technology investment. Current wholesale electricity prices present a potential near-term opportunity and risk. However, our outlook to FY28 continues to see credible pathways to EBITDAF in the upper $500 million range.
Speaker #1: That outlook is based on P50 generation assumptions, no major changes to regulatory or market settings, and no significant unplanned outages or fuel disruptions. Importantly, it reflects the continued benefits to our customers and investors from executing our strategy to deliver improved margin quality, cost discipline, and strong capital management.
Speaker #1: If we now look beyond FY28 and out to FY32—this is Horizon Two of Gen 35, the period from now out to FY32. We first shared this framework during our successful capital raise earlier in the year.
Malcolm Johns: If we now look beyond FY28 and out to FY32, this is Horizon Two of Gen35, the period from now out to FY32. We first shared this framework during our successful capital raise earlier in the year. The FY32 Growth Plan has five commercial pillars to it. Customer, where we are focused on growing demand through electrification of transport and heat, along with new and emerging demand sources. This will also lower the total cost of energy for our customers, as I mentioned earlier. Renewables, where our focus is structurally lowering our long-term average generation cost through investing in new renewable generation. Huntly, where we are leveraging the existing and emerging growth opportunities the Huntly site offers us to firm our portfolio and increase asset-backed trading. OpEx, returning to core operating cost levels from FY28 and delivering ongoing productivity gains.
Speaker #1: The FY32 growth plan has five commercial pillars to it. Customer, where we are focused on growing demand through electrification of transport and heat, along with new and emerging demand sources.
Speaker #1: This will also lower the total cost of energy for our customers, as I mentioned earlier. Renewables, where our focus is structurally lowering our long-term average generation cost through investing in new renewable generation.
Speaker #1: Huntley, where we are leveraging the existing and emerging growth opportunities the Huntley site offers us to firm our portfolio and increase asset-backed trading. OPEX, returning to core operating cost levels from FY28, and delivering ongoing productivity gains. And our headwinds: the cost of maintaining a future development pipeline of around 2,500 megawatts, and the known and planned decline of Coupé out to around FY34.
Malcolm Johns: Our headwinds, the cost of maintaining a future development pipeline of around 2,500 megawatts, and the known and planned decline of Kupe out to around FY34. To recap, we are building a culture focused on margin quality, cost discipline, and strong capital management to deliver demand growth, a lower average generation cost, leveraging the opportunities from the Huntly site, deliver a competitive operating cost base, and lean into our known headwinds. Thank you for your time today. We will now move to your questions.
Speaker #1: So, to culture focused on margin quality, cost discipline, and strong capital management to deliver demand growth; a lower average generation cost; leveraging the opportunities from the Huntley site; delivering a competitive operating cost base; and leaning into our known headwinds.
Speaker #1: Thank you for your time today. We will now move to your questions.
Speaker #2: Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two.
Operator: Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up your handset to ask your question. Please limit to two questions. Our first question is from Grant Swanepoel with Jarden. Please proceed.
Speaker #2: If you are on a speakerphone, please pick up your handset to ask your question. Please limit yourself to two questions. Our first question is from Grant Swanenpoel with Jordan.
Speaker #2: Please proceed.
Speaker #4: Good morning, team.
Grant Swanepoel: Good morning, team.
Speaker #5: Morning, Grant.
Malcolm Johns: Morning, Grant.
Speaker #6: Morning, Grant.
Emma Oettli: Morning, Grant.
Speaker #4: So you've started the year really well from a hydro perspective. Your guidance is sitting mid-range at 500. Does that mean that because it's a P50, actually at the moment we're tracking above mid guidance?
Grant Swanepoel: You've started the year really well from a hydro perspective. Your guidance is sitting mid-range at 500. Does that mean that because it's a P50 actually at the moment, we're tracking above mid guidance? On that front, the gas that you're unselling, is there a bit of a loss in that through winter? How do you mitigate that going forward? With that in mind, is the Tariki gas storage potential still looking good, even though you are saying you haven't committed to that yet?
Speaker #4: And on that front, the gas that you're reselling, is there a bit of winter? And how do you mitigate that going forward?
Speaker #4: And with that in mind, is the Tariqi gas storage potential still looking good, even though you are saying you haven't committed to that yet?
Speaker #5: Thanks, Grant. Obviously, we've guided based on P50 hydro, wind, and solar, and hydro conditions will play a role in terms of where our final result lands, as they did in FY26.
Malcolm Johns: Thanks, Grant. We've guided based on P50 hydro, wind, and solar. Hydro conditions will play a role in terms of where our final result lands as they did in FY26. We also, of course, have the remainder of the tech project OpEx in there and the remainder of the single brand OpEx in there as well. That's where we've come to the NZD 485.20 is based on P50 hydro, wind, solar, and with those known big project costs in there. In terms of gas, I'm not sure I understood your question correctly. Could you just repeat it?
Speaker #5: We also, of course, have the remainder of the tech project OPEX in there, and the remainder of the single brand OPEX in there as well.
Speaker #5: So that's where we've come to; the $485.20 is based on P50 hydro, wind, and solar, and with those known big project costs in there. In terms of gas, I'm not sure I understood your question correctly.
Speaker #5: Could you just repeat it?
Speaker #4: Well, you would normally have to use a lot more gas. You've sold that gas on through winter because you've had so much water. Is that gas being sold on at a material loss to what you're paying for it?
Grant Swanepoel: Well, you would normally have to use a lot more gas, and you've sold that gas on through winter because you've had so much water. Is that gas being sold on at a material loss to what you're paying for it?
Speaker #5: No, in terms of a net position, no.
Malcolm Johns: No.
Grant Swanepoel: Okay.
Malcolm Johns: In terms of a net position, no.
Grant Swanepoel: Tihori, how's that developing?
Speaker #4: And Tariqi? How's that developing?
Malcolm Johns: Tariki, so we continue to have engagement with the joint venture partners that own Tariki. They are in subsurface work at this point in time. Quite clearly, as we have said, gas storage is helpful, not essential to Genesis's FY32 position, but potentially material to the long-term viability of Unit Five.
Speaker #5: And Tariqi, so we're continuing to have engagement with the joint venture partners that own Tariqi. They're in subsurface work at this point in time.
Speaker #5: Quite clearly, as we said, gas storage is helpful—not essential to Genesis's FY32 position, but potentially material to the long-term viability of Unit Five.
Grant Swanepoel: A second question is around IT delivery. You are saying that most of that will be done by the end of FY27. Isn't there quite a bit of slippage in that, or is the slippage under your control?
Speaker #4: A second question: around IT delivery, you're saying that most of that will be done by the end of FY27. Is there quite a bit of slippage in that, or is the slippage under your control?
Speaker #5: The slippage is under our control at the moment. As we said, I think the results last year—the three big systems we're replacing—is like a heart and lung transplant for the business.
Malcolm Johns: The slippage is under our control at the moment. As we said, I think at results last year, the three big systems we are replacing is like a heart and lung transplant for the business. The financial management system is now in. The electricity trading and risk management system is well advanced. We are through the first phase of the billing and CRM system. The big migration will occur in the H2 of this financial year. Once that is complete, then all three systems will be in place. But we would consider it at this point in time to be under our control, Grant.
Speaker #5: The financial management system is now in, and the electricity trading and risk management system is well advanced. We're through the first phase of the billing and CRM system.
Speaker #5: The big migration will occur in the second half of this financial year, and once that's complete, all three systems will be in place.
Speaker #5: But we would consider it, at this point in time, to be under our control, Grant.
Speaker #2: Our next question is from Joshua Dale with Craig's Investment Partners. Please proceed.
Operator: Our next question is from Joshua Dale with Craigs Investment Partners. Please proceed.
Speaker #7: Good morning, Malcolm, Imran, Michael. Good slide pack—thanks for the detail. Just on your FY28 EBITDA target of up to $500 million: staying on track with commissioning of Leaston and Edge Consola is pretty critical to reaching that target and that specific timeframe.
Joshua Dale: Good morning, Malcolm, Emma, and Michael. Good slide pack. Thanks for the detail. Just on your FY28 EBITDA target of NZD 500 million. Staying on track with commissioning of Leeston and Edgecumbe Solar is pretty critical to reaching that target and that specific timeframe. What gives you confidence those are going to come in on time, and what is the risk of slippage?
Speaker #7: What gives you confidence those are going to come in on time, and what is the risk of slippage?
Speaker #5: We're working with reputable EPCs, and so on that basis, and based on our experience to date, we see no reason for slippage in COD in those projects.
Malcolm Johns: We're working with reputable EPCs. On that basis, based on our experience to date, we see no reason for slippage in COD in those projects. As with all of these projects, that's based on our knowledge today. If we encounter problems, there's always a risk of that, but we don't see it as a high risk at this point in time, Josh.
Speaker #5: As with all of these projects, that's based on our knowledge today. If we encounter problems, there's always a risk of that, but we don't see it as a high risk at this point in time, Josh.
Speaker #7: Okay, that's great. The second question is just around gas. If we look at slide 31, it shows your equity ownership in Coupé dropping to zero in the middle of 2029.
Joshua Dale: Okay, that's great. The second question, just around gas. If we look at slide 31, it shows your equity ownership in Kupe dropping to zero in the middle of 2029. If you are off base load gas by then, I guess perhaps it's less important to have. What is your thinking around keeping Kupe? I suppose also, if you are exploring an offshore sale of Unit Five, have you done any preliminary work around what price per megawatt might be achievable? I appreciate it's conditional on LNG.
Speaker #7: If you are off baseload gas by then, I guess perhaps it's less important to have—what is your thinking around keeping Kupe? And I suppose also, if you are exploring an offshore sale of unit five, have you done any preliminary work around what price per megawatt might be achievable?
Speaker #7: I appreciate it's conditional on LNG.
Speaker #5: Yep. So those dips that you can see, in particular on November 25, are the planned outages for Kapuni Gas Field. They normally occur in November each year, and they coincide with the planned outages of Unit 5.
Malcolm Johns: Yep. Those dips that you can see, in particular in November 2025, are the planned outages for Kupe gas field. They normally occur in November each year, and they coincide with the planned outages of Unit Five. So that's why you see that. But in essence, I'm not actually 100% sure why our equity gas drops to zero then. Let us find out the answer to that and come back to you, Josh. In terms of your second question, which was about offshore sales, we have done some preliminary work around what the international market for units like Unit Five is. You can do the same thing yourself if you want to, just basically Google them, and there's a number of different purveyors of these machines.
Speaker #5: So that's why you see that. But, in essence, I'm not actually 100% sure why our equity gas drops to zero then. Let us find out the answer to that and come back to you, Josh.
Speaker #5: In terms of your second question, which was about offshore sales, we have done some preliminary work around what the international market for units like Unit 5 is.
Speaker #5: And you can do the same thing yourself if you want to—just basically Google them, and there are a number of different purveyors of these machines.
Speaker #5: And I wouldn't want to put a price on it at the moment, but the four-year timeline—the waitlist that's in the market at the moment—means there is a demand for these machines.
Malcolm Johns: I wouldn't want to put a price on it at the moment, but the four-year timeline that the waitlist, sorry, that's in the market at the moment means there is a demand for these machines. People are paying attractive prices for them.
Speaker #5: And people are paying attractive prices for them.
Speaker #7: Okay, thanks very much.
Joshua Dale: Okay, thanks very much.
Speaker #5: Thanks, Josh.
Malcolm Johns: Thanks, Josh.
Operator: Our next question is from Andrew Harvey-Green with Forsyth Barr. Please proceed.
Speaker #7: Why don't we go here?
Speaker #2: Our next question is from Andrew Harvey-Green with Forsyth Barr. Please go ahead.
Speaker #6: Morning, Malcolm, Imran, Michael. Thanks for that. First question, I thought I’d just follow on from Joshua there. Just on unit five, and I’m assuming the LNG decision is very tightly tied to what happens with unit five.
Andrew Harvey-Green: Morning, Malcolm, Emma, and Michael. Thanks for that. First question I just had, just following on from Joshua Dale there, just on Unit Five, and I am assuming the LNG decision is very tightly tied to what happens with Unit Five. Is that presumably a precondition to Unit Five staying around?
Speaker #6: Is that, presumably, a precondition to Unit Five staying around?
Malcolm Johns: As we have said since 2024, we will not maintain assets that do not have a compelling commercial case to maintain. In the case of Unit Five, you essentially need three things. One is you need committed demand for it, the second is you need cost competitive fuel for it, and the third is you need to be able to match the flexibility that will come into the market, in other words, gas storage. So, to build a commercial case for Unit Five domestically, you need to tick those three boxes. And we are at a point now where, whilst there is work going on around those three boxes, it is incumbent on us to start investigating other options beyond 2029.
Speaker #5: As we've said, since 2024, we won't maintain assets that don't have a compelling commercial case to maintain. In the case of Unit Five, you essentially need three things.
Speaker #5: One is you need committed demand for it. The second is you need cost competitive fuel for it. And the third is you need to be able to match the flexibility that will come into the market.
Speaker #5: In other words, gas storage and so to build a commercial case for Unit Five domestically, you need to tick those three boxes. And we're at a point now where, whilst there's work going on around those three boxes, it's incumbent on us to start investigating other options beyond 2029.
Speaker #6: Yeah. The next question I just had was around your capex guidance in particular. Could you give a bit more color in terms of the Huntley work that's ongoing, and how much is included in the SIB capex number for this year? And what can we expect for this, probably in the next two or three years, if it's a multi-year program?
Andrew Harvey-Green: Yeah. Next question I just had was around your CapEx guidance in particular. So are you able to just give a bit more color in terms of the Huntly work that is ongoing? How much is included in the SIB CapEx number for this year and what we can expect for this probably in the next 2 or 3 years, if it is a multi-year program.
Speaker #1: We've provided the same business capex guidance this year, between $145 million and $155 million. This is elevated. And if you look across the FY32 growth plan, what we've also included in the integrated report is up to $800 million.
Emma Oettli: We have provided same business CapEx guidance this year between NZD 145 million and NZD 155 million. This is elevated, and if you look across the FY32 Growth Plan, what we have also included in the integrated report is up to NZD 800 million, will be spent on same business across this time period. So that is now out there as an outlook to point to. Huntly Life Extension Program continues for the next maybe 2 to 3 years, but at the same time, we have also got mid-life CapEx programs across generators and turbines out in our hydros, and that is underpinning that elevated forward view.
Speaker #1: We'll be spending on staying in business across this time period. So that's now out there as an outlook to point to. Huntley Life Extension continues for the next, maybe, two to three years.
Speaker #1: But at the same time, we've also got midlife capex programs across generators and turbines out on our hydros, and that's underpinning that elevated forward view.
Speaker #5: So in essence, if you take that 800 million removed, the Huntley Life Extension and the replacement of turbines and generators, you get to our long run average of about 80 million dollars a year of stay in business capex.
Malcolm Johns: So in essence, if you take that NZD 800 million, remove the Huntly Life Extension and the replacement of turbines and generators, you get to our long run average of about NZD 80 million a year of same business CapEx.
Speaker #6: Great. Thanks. Thanks for that color.
Andrew Harvey-Green: Great. Thanks for that color.
Speaker #2: As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Our next question is from Steven Hudson with Macquarie Group.
Operator: As a reminder, if you would like to ask a question, it is star one on your telephone keypad. Our next question is from Stephen Hudson with Macquarie Group. Please proceed.
Speaker #2: Please proceed.
Stephen Hudson: Morning, everyone. Can you hear me okay?
Speaker #7: Morning, everyone. Can you hear me okay?
Speaker #5: Hey, morning, Steven.
Malcolm Johns: Yeah. Morning, Stephen.
Speaker #7: Hi there. Just on EBITDA, can you discuss EBITDA improvement in a little bit more detail over FY26, and what you are sort of baking in for FY27?
Stephen Hudson: Hi there. Just on Kupe, can you discuss the EBITDA improvement in a little bit more detail over FY26 and what you are sort of baking in for FY27?
Speaker #1: Is that from the segment note, Steven? When you look at EBITDA improvement? Yeah, that's predominantly the gas price that's transferring between the two business units.
Emma Oettli: Is that from the segment note, Steven? When you look at EBITDA improvements?
Stephen Hudson: Yep.
Emma Oettli: Yeah. That is predominantly the gas price that is transferring between the two business units. So there has been an increase in that price year on year, and that is what has increased. That is what is driving it. Production is down, price is up.
Speaker #1: So, there has been an increase in that price year on year, and that's what's increased; it's what's driving it. Production is down, price is up.
Stephen Hudson: What you are expecting into FY27, I think it is, what is it, 36 to 69 and then a more normalized number in 2027?
Speaker #7: And what you're expecting sort of for FY '26 to FY '27, I think it's—what is it? Thirty-six to sixty-nine, and then sort of a more normalized number in '27, or?
Speaker #1: We don't provide guidance, I guess, at an individual segment level, but what we can say is that in the FY28 number and the FY32 growth plan, we have included that headwind that comes from our coupe asset long term.
Emma Oettli: We do not provide guidance, I guess, at an individual segment level, but what we can say is that in the FY28 number and the FY32 Growth Plan, we have included that headwind that comes from our Kupe asset long term.
Speaker #7: Would you still expect '27 to be sort of an elevated EBITDA number? Or should we expect a large normalization back to the '25 kind of level?
Stephen Hudson: Would you still expect 2027 to be an elevated EBITDA number, I guess, or should we expect a large normalization back to the 2025 kind of level? Just direction, broadly speaking, given it was such a large movement in 2026.
Speaker #7: Just broadly speaking, given it was such a large movement in 2026.
Speaker #5: Can we come back to that one, Steven? Sitting here, we don't have that information to hand—sorry. Yeah.
Malcolm Johns: Can we come back to that on Steven? Sitting here, we do not have that information to hand. Sorry. Yeah.
Speaker #7: Yeah, no problem. And then just on HFO, can you—I mean, obviously there's been a bit of talk about the LNG terminal and what it may mean for all sorts of dry year energy swings.
Stephen Hudson: Yeah, no problem.
Malcolm Johns: Thank you.
Stephen Hudson: Just on HFO, there has obviously been a bit of talk about the LNG terminal and what it may mean for all sorts of dry year energy swings. I understand there is a 5-year break on the HFO, is that correct? If so, how does the break clause work?
Speaker #7: I understand there's a five-year break on the HFO. Is that correct? And, if so, how does the break clause work?
Malcolm Johns: We are bound by confidentiality on that. There is a review midway through the contract that has a number of aspects to it, but we cannot go into detail on that, Steven.
Speaker #5: We're bound by confidentiality on that. There is a review midway through the contract. That has a number of aspects to it, but we can't go into detail on that, Steven.
Speaker #7: Okay, all right. I'm going to sneak in a third, if you don't mind. Just in terms of normalization, it was obviously a fairly quiet year in terms of normalization this year.
Stephen Hudson: Okay. No worries. I am going to sneak in a third, if you do not mind. Just in terms of normalization, it was obviously a fairly quiet year in terms of normalization this year. Can you call out any kind of expected normalization that you are expecting over FY27?
Speaker #7: Can you call out any kind of expected normalization that you're expecting over FY27?
Speaker #1: No, looking forward, we see normalization becoming quite a small number, quite a small part of those numbers. So again, we'll probably revisit across the year to understand if that's helpful or not.
Emma Oettli: No. Looking forward, we see normalization becoming quite a small part of those numbers. Again, we will probably revisit across the year to understand if that is helpful or not.
Stephen Hudson: Okay, cool. Thank you.
Speaker #7: Okay, cool. Thank you.
Speaker #5: Thank you.
Malcolm Johns: Thank you.
Operator: There are no further questions at this time. This will conclude today's conference. Thank you for your participation. You may now disconnect.
