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Energy Company, ERM Power Limited (ASX:EPW) has released its half-year results for FY 2019. For the half-year period, the company has reported Revenue from ordinary continuing activities at $1,585.58 million, which is 3% higher than the previous corresponding period (pcp). Further, the company has reported Underlying EBITDAF of $47.339 million, which is 5% less than pcp. The companyâs Statutory net profit increased by 38% to $68.977 million in 1H FY19 as compared to pcp. Following the release of the results, the share price of the company increased by 7.591% as on 21 February 2019 (AEST 2:15 PM).
While commenting on the half-year results, the companyâs CEO Jon Stretch stated that the Company achieved key milestones in the half-year period while delivering strong net profit and improved gross margin driven by underlying sales, operational performance, product and customer mix, and portfolio optimization.
During the half year period, the company completed the sale of its US business, Source Power & Gas for a total consideration of AU$37.2 million. Further, the company has also finalized the acquisition of Out Performers which will add substantially to the companyâs capability and scope in the Energy Solutions business.
In the half-year period, the Electricity sales load was down as compared to the prior year but forward contracted load, which is electricity already contracted from FY 2020, grew 3% to 29.9TWh during the half year period. This reflects the companyâs continued strong competitive position in the market and pricing discipline. The company is expecting the sold load to be stronger in FY 2020 based on current forward sales.
In FY 2019, for the Australian electricity retailing business, the company is expecting a Contraction of sales volume to about 18TWh from a forecast of 19TWh. The company is also expecting to increase in average gross margin from the previously communicated $4.75/MWh to about $5.10/MWh. In FY 2019, the company is expecting its Medium-term gross margin range to increas from $4.00-$5.50/MWh to $4.50-$6.00/MWh. The companyâs LGC strategy is expected to deliver $37 million NPAT across FY2019 & FY2020 with approximately $16 million in FY 2019 and the remainder in FY2020
The companyâs Board has declared a fully franked interim dividend of 4.5cps up from 3.5cps in 1H FY2018. The Board has also announced a fully franked special dividend of 3cps. The record date for the interim dividend and the special dividend is 27 March 2019 and the payment date is 17 April 2019. The ex-dividend date is 26 March 2019.
The stock of ERM Power Limited is currently trading at $1.630 with a market capitalization of circa $385.15 million as on 21 February 2019 (AEST 2:15 PM). The stock has generated a YTD return of -0.33% and posted returns of 7.45% and -10.36% over the last six months and three months period respectively. It has a 52-week high price of $1.855 and a 52-week low price of $1.255 with an average trading volume of ~167,494.
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