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