Securities in APA Group fell yesterday after the utility revealed an $11.7 million first-half loss thanks to a $250 million non-cash impairment against the value of its Orbost gas plant in Victoria.
The gas utility’s securities fell 1.2% to $9.06, despite stronger underlying earnings and upgraded future guidance.
APA reported flat revenue at $1.07 billion for the six-month to December as strong volume growth in Western Australia and Northern Territory was offset by softer contract renewals across certain East Coast pipelines and lower energy consumption in Victoria (thanks to the lockdowns).
Earnings for the half fell by 2.3% to $822.8 million, driven by higher compliance and insurance costs, and the cost of higher investment in strategic development opportunities and internal capability.
Profit after tax – excluding the Orbost impairment – was down 7% to $163 million.
But interim distribution was lifted by 4.3% to 24 cents per security and the full-year distribution guidance to 51 cents per security, is up 2% on a year ago.
APA reconfirmed its 2021 full-year earnings guidance within a range of $1.635 billion and $1.665 billion and said it was poised to play “a central role in supporting the Federal Government’s plans for a gas-led economic recovery.”
CEO Rob Wheals, said in the statement that APA had again delivered a solid first half performance, with strong volume growth in key markets against a backdrop of challenging market conditions.
“Our performance for the period demonstrates the underlying strength and resilience of the business and our decision to upgrade our FY21 distribution guidance to 51.0 cents per security reflects both our confidence in APA’s outlook and the capacity that exists within our balance sheet,” he said on Tuesday.
“Our refreshed strategy positions the business for further growth, complementing our strong organic pipeline. Growth capex is now expected to exceed $1 billion through to FY23, building on our recent investments in the Northern Goldfields Interconnect and the Gruyere Hybrid Energy Microgrid.
“As the energy transition gathers pace, we remain confident both in the important role gas will continue to play as well as in our ability to support the transition through the delivery of world-class integrated energy solutions for our customers,” Mr Wheals said in Tuesday’s statement.