Infigen ‘in the black’ in two years

WIND power group Infigen’s financial outlook remains clouded by the  continuing low wholesale price of electricity, with little chance of any  improvement in the year ahead.

As a result,  its shares remain near the   record low of 24.5¢ touched  recently, closing steady yesterday at 25.5¢.

In the year to June, Infigen had a net loss of $60.99 million, down slightly  from the loss a year earlier of $74.4 million. The loss per share declined to  7.9¢ from 8.9¢.

Revenue for the year rose to $285 million from $282 million a year  earlier.

In the year ahead, commissioning of the Woodlawn project  will give revenue a  further lift, but it will be several years  before the group’s finances have any  prospect of turning around.

Debt remains at twice the level of shareholder funds, with interest payments  of $87.9 million in the latest year alone a continuing constraint on its  financial performance.

A further $250 million in debt is to be repaid over the next two years, after  which the balance sheet will still remain stretched.

For most investors, Infigen remains a punt on the effect of the federal  government’s proposed carbon tax, which is  to start at $23 a tonne, coupled  with the prospect of rises in the price of renewable energy certificates.

The planned carbon tax introduction in the second half of next year is  expected to boost wholesale electricity prices, which may have a flow-through  effect on Infigen’s revenues.

”In two years, we will be in profit – net profit after tax,”  Miles George,  Infigen’s managing director, said yesterday.

The forward market for wholesale electricity prices and renewable energy  certificates indicates that both are likely to rise over the next two to three  years.

The price of wholesale  electricity is expected to rise to almost the same  extent as the planned $23 carbon price.

By around 2014, much of the present surfeit of renewable electricity  certificates will have been absorbed, setting the scene for a turnaround in  Infigen’s fortunes.

Infigen has contracted 58 per cent of its output, leaving the other 42 per  cent  dependent on market conditions.

While wholesale electricity prices have moved off their lows, little fundamental  improvement in the situation is anticipated, Infigen said.

The Sidney Morning Herald

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