APA Group is focusing on adding supply deals with customers despite regulatory challenges, as it looks to build on investments and an expanded asset base that yielded strong full-year profit growth.
The gas pipeline major made a net profit of $237 million in the year to June 30, up 32 per cent on the prior year as it benefited from acquisitions in previous years.
Managing director Mick McCormack said the company is continuing the focus on growing business despite the federal government’s threat of increased regulation of the gas sector.
“We are just getting on and doing what we have always done, because that is what has got us here,” he told investors.
“We continue to do deals with customers, (consider) their energy issues (and) put up some smart energy solutions.”
The federal government this year introduced the Australian Domestic Gas Security mechanism, giving it powers to impose export controls on companies when there is a shortfall of gas supply in the domestic market.
The move followed a jump in gas prices on the east coast and warnings by the Australian Energy Market Operator of domestic gas and electricity shortages.
APA head of strategy and development Ross Gersbach slammed the threat of intervention, saying Australia had sufficient gas resources but is facing a gas price crisis because of insufficient supply and more expensive production.
“We are doing deals with customers to bring cheaper gas to market, but in the long run more supply does need to come online,” he said.
Mr Gersbach said APA understands the government’s desire to reduce energy prices, but it has resulted in numerous regulatory interventions thrust upon the industry at short notice and with limited consultation.
“There has been no increase in real terms in tariffs since 2002 notwithstanding a tripling of gas prices during that time,” he said.
“We are not the problem here.”
APA has forecasting earnings before interest, tax and depreciation of $1.47 billion to $1.51 billion in 2017/18, a modest increase from 2016/17.
Its shares gained six cents to $8.47.
APA POSTS STRONG PROFIT GROWTH
* Ful year net profit up 32pct to $236.85m
* Revenue up 11.1pct to $2.33b
* Final distribution up 0.5 cents to 23 cents