Genesis Energy sees growth in electricity retailing as customer numbers stabilise

Tuesday 20th October 2015

Genesis Energy said it has seen growth in electricity sales in the first three months of the new financial year after New Zealand's biggest electricity and gas retailer halted a slide in customers in the face of "aggressive" competition.

The company's total customer accounts fell 2 percent to 622,837 in the 2015 financial year, reflecting a 1 percent decline in electricity customers and a 5 percent drop in gas customers. For electricity retailing, that marked an improvement from 2014, when Genesis's customers fell 4 percent, while gas customers fell 3 percent.

Chief executive Albert Brantley, who is to leave the company in the current year, told shareholders at their annual meeting in Wellington today that competition in electricity and gas retailing is expected to continue in the face of smaller niche retailers and rivals "aggressively acquiring customers" with bundled offerings of services. Genesis managed to stabilise customer numbers in the fourth quarter via service improvements rather than discounting that would have eroded margins, he said.

"The first three months of the current financial year have seen a continuance of the turnaround, with growth in both our electricity brands," Brantley said.

Genesis has 26 percent of New Zealand's electricity retailing market and has also maintained its leading market share of 40 percent of the gas market, even in the face of a decline in customers.

"As with electricity, the gas market continues to be competitive with new market entrants, and bundling of products driving increased rates of switching," he said. The company had responded with an offer for customers to pay under a selection of caped usage amounts, smoothing their monthly payments.

The company affirmed its guidance for earnings growth to stall in 2016. Earnings before interest, tax, depreciation, amortisation and changes to financial instruments would be in line with last year's $345 million, although the company expects to lift its total dividends for the year. Genesis expects to publish its report for the first quarter later this week.

Directors up for re-election at today's meeting included chair Jenny Shipley.

Genesis shares rose 0.5 percent to $1.85 and have fallen about 6 percent in the past 12 months while the NZX 50 Index rose 13 percent.

BusinessDesk.co.nz

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