Genesis Energy (ASX:GNE) executives highlighted a record first-half result for FY26 and outlined an updated long-term earnings outlook as the company launched a NZD 400 million equity raise aimed at accelerating its renewables and firming pipeline.
Record first-half earnings and “flexibility” focus
Chief Executive Officer Malcolm Johns said Genesis delivered a record FY26 half-year normalized EBITDAF of NZD 307 million, pointing to the company’s ability to use its generation portfolio to protect earnings across varying hydrology and wind conditions. Johns described that capability as the company’s “market-leading flexibility” and framed it as a core investor proposition: “earnings resilience, no matter the weather.”
The board declared an interim dividend of NZD 0.073 per share, which management said was in line with the current dividend policy.
Financial results: lower revenue, higher margins
Chief Financial Officer Julie outlined reported EBITDA of NZD 303 million and reported net profit of NZD 95 million for the half, both “significantly up” on the prior comparable period. She said the period featured “significant supply across the sector” due to extreme weather conditions, which drove lower wholesale prices and reduced the need for thermal generation.
Revenue fell 13% overall, which Julie attributed largely to lower wholesale prices and reduced generation. However, she said tactical actions to rebalance the customer demand mix delivered “higher quality retail margins.”
Julie also noted the half-year accounts now include the accounting treatment for new long-term Huntly firming options, including Rankine units valued as capacity assets and a new derivative position tied to long-term HFO calls expected from counterparties, along with associated coal and carbon obligations.
On profitability drivers, Julie said group gross margin rose 27% year over year, supported by a shift in the generation mix, lower fuel costs, and an 8% lift in retail margin contribution. Hydro generation increased 17% versus the prior comparable period and was supplemented by about 250 GWh of additional renewable generation from power purchase agreements (PPAs). She said the average cost of gas declined by about NZD 3/GJ versus the prior period, partially offset by higher coal and carbon costs.
Genesis also recorded higher wholesale gas margin, which Julie said was aided by extending the shutdown of Unit 5 in a lower-price environment and redirecting gas to industrial customers in the second quarter.
Operating costs increased 7% versus the prior comparable period (excluding digital projects). Julie said Genesis removed around NZD 5 million of costs through initiatives including a retail operating model reset and changes to insurance structure, but incurred around NZD 2 million of higher costs due to temporary resourcing as productivity initiatives were activated and as “One Brand” synergies were pursued.
Gen35 progress: customers, renewables pipeline, and systems
Management said Gen35 remains focused on adding new renewables into an established customer base, displacing baseload gas generation, and leveraging flexibility to drive growth.
On the retail platform transition, Johns called out a milestone in migrating the first cohort of around 50,000 customers onto Gentrack’s g2 platform, stating the transition went well and was already generating operational and customer benefits. “Release 2” was described as on track for delivery late this calendar year or early next calendar year.
Johns also said Genesis’ development pipeline has expanded substantially, from about 364 MW in FY23 to around 2,500 MW currently. He said the company remains on track to deliver renewables growth objectives of about 500 MW of solar and 200 MW of battery energy storage systems (BESS) via advanced-stage and consented sites with grid connections.
Genesis completed a partnership agreement with Yinson Renewables for “first-mover options” on PPAs and joint venture wind developments across a 1,000 MW wind pipeline. Separately, Genesis has an offtake agreement for 70% of the Mount Cass Wind Farm in Canterbury, which management said is scheduled to start construction in Q3 FY2026 with supply expected in Q1 FY2029. Johns also referenced Genesis’ own wind options at Castle Hill.
On flexibility investments, Johns said BESS 1—a NZD 135 million, 100 MW two-hour battery—was on track and within budget, and that the BESS 2 business case was progressing. He said solar and BESS investments are expected to support margin uplift across Genesis’ three hydro schemes, which can store around 500 GWh.
On digital transformation, Johns said major technology upgrades remained within a total cost envelope of NZD 145 million, though timing could shift between FY26 and FY27. Julie said FY26 is the peak year for digital spend, including about NZD 14 million in the half for the retail billing system and about NZD 10 million for the finance system replacement, which went live Feb. 2.
Guidance and FY32 outlook: higher pipeline-driven EBITDAF
Julie said FY26 normalized EBITDAF guidance remained unchanged at NZD 490 million to NZD 520 million, based on P50 hydro inflows and expectations of more thermal generation in the second half as seasonal demand increases. She noted the outlook remains subject to hydrology, gas dynamics, plant performance, and market conditions.
Management updated its FY28 view and extended its outlook to FY32. Johns said Genesis was updating its FY28 outlook to “upper NZD 500 million EBITDAF.” Julie said FY28 normalized EBITDAF was increased to “upper NZD 500 million” from the previously indicated “mid to upper NZD 500 million,” citing delivery to date and confidence in initiatives underway.
For FY32, Julie provided an EBITDAF range of NZD 650 million to NZD 750 million, enabled by a growth investment pipeline of around NZD 2 billion. She said the plan includes advanced-stage renewable developments intended to displace baseload gas generation and reduce total cost of generation, while maintaining a focus on productivity and like-for-like OpEx targets of around NZD 380 million in real terms (with incremental OpEx expected as new investments come online).
NZD 400 million equity raise: structure and use of funds
Johns said the equity raise was intended to bring forward “the highest return elements” of the pipeline while preserving balance sheet settings and the dividend framework. He said proceeds would support accelerating delivery, with initial focus on completing about 500 MW of solar, 200 MW of BESS, and life extension of the Rankines.
Julie said the NZD 400 million raise is structured as a placement and a pro rata renounceable rights offer, with the Crown pre-committing to subscribe to maintain a 51% shareholding. The balance is underwritten, and the rights offer is renounceable, allowing shareholders who do not participate to potentially realize value via a shortfall bookbuild.
- Placement price: NZD 2.15 per share (an 8% discount to the ex-dividend adjusted NZX last close prior to announcement)
- Rights offer price: NZD 2.05 per share (a 10.8% discount to the theoretical ex-rights price)
- Dividend entitlement: Shares issued under the placement and rights offer will not be entitled to the FY26 interim dividend
Julie said trading was halted as the placement bookbuild began, with trading expected to resume Tuesday, Feb. 24. She said the rights offer shares will trade ex-rights from Friday, Feb. 27, with a record date of Monday, March 2, opening Wednesday, March 4, and closing Tuesday, March 17.
In Q&A, management reiterated that the board intends to maintain the fixed dividend policy through FY28, with annual reviews and the potential to return to a more market-aligned policy beyond FY28 (subject to board decisions at that time). Management also discussed funding assumptions, including maintenance and life-extension capex related to Huntly under long-term HFO commitments, and said net debt was modeled to remain within a 2x to 3x range, with capital recycling from certain solar assets viewed as a lever to help manage leverage during wind development.
About Genesis Energy (ASX:GNE)
Genesis Energy Limited generates, trades in, and sells electricity to residential and business customers in New Zealand. It generates electricity from thermal, hydro, solar, and wind sources. The company operates through Retail, Wholesale, and Kupe segments. The Retail segment supplies energy, including electricity, gas, and LPG to end-users, as well as provides related services. The Wholesale segment engages in the supply of electricity to the wholesale electricity market; supply of gas and LPG to wholesale and retail customers; and purchase and sale of derivatives to fix the price of electricity.
