APA Group, Australia’s biggest gas pipeline operator, has reported a 99 per cent drop in statutory profit in the year to June thanks to the $250 million write-down at the Orbost gas plant in Victoria, as well as other charges.
APA has a key role in the Australian energy market with its network of pipeline infrastructure, power generators and gas storage and processing plants across the country.
But that wasn’t enough to protect the bottom line when the energy market is currently going through enormous turmoil with the rise of renewable energy sources and the slump in electricity prices undermining the value of fossil fuel-based assets.
APA told the ASX on Wednesday that statutory profit had dropped to just $3.7 million in the 12 months to June 30, down from $311 a year earlier.
Even after stripping out these one-off costs, APA’s full-year earnings fell 9.6% to $281 million.
That was after analysts had forecast earnings of about $299 million.
The company’s revenue gain was weak, as was the underlying gross profit.
Revenue edged up 0.7% to $2.144 billion thanks to the contribution from the Orbost gas processing plant, which is no longer worth as much. The write-down in the value of the gas plant was announced in the interim results in February.
The company’s underlying earnings before interest, tax, depreciation and amortisation (EBITDA) dipped 1.3% to $1,633.0 million, “ ue to increased investment in strategic development opportunities and capability, higher insurance and compliance costs and softer contract renewals in challenging market conditions.”
The board declared a final dividend of 27 cents a share, to be paid on September 15, bringing the full-year payout to 51 cents, one cent a share up from the previous year.
Directors expect that to rise nearly 4% to 53.0 cents a security for the year to June, 2022.
Despite that confident outlook, investors still marked down the shares by 3% to $9.66.
APA chief executive Rob Wheals described the market conditions as “challenging”, but said full-year dividends underscored the company’s “long track record” of growth in distributions and confidence in the outlook.
Mr Wheals said gas contributed to play a “critical role in Australia’s energy mix” by supporting the uptake of weather-dependent renewable energy and helping ensure ongoing access to reliable and affordable energy.
