New Zealand-based diversified energy provider, Genesis Energy Ltd (ASX: GNE) has failed to get its share price to rally after releasing its third-quarter performance report. At the time of writing, the Genesis Energy share price is down 0.31% to $3.19.
A mixed bag of results has been met with a mixed reception from investors. Let’s take a look over what the energy provider released today.
Customers dwindle
The Genesis Energy share price is on the slide today after the company advised its total customers declined, despite a 20% surge in total energy generation compared to last year. With a 2.4% fall, total customers took a step backwards from 486,338 to 474,702 by the end of the March quarter.
The issue stems from a high net customer churn rate of 15.2% on a 3-month rolling average. Genesis has been taking steps to try to reduce this by building customer engagement.
One such initiative has been the company’s ‘Power Shout hours’, which offers free energy from its rewards program. Genesis gave its customers over 1.2 million Power Shout hours over the quarter. Management believes this was responsible for the 19% increase in the company’s interaction net promoter score.
In addition, the re-platforming of Genesis Energy’s sales, service, and billing technologies is on course as planned. A decision is expected to be made by the end of FY21 from the company’s shortlist of potential suppliers.
Gas and oil out of favour
Although Genesis’ total energy generation was comprised of 31% gas, volumes fell drastically during the quarter. The retail segment of the business recorded a 20% fall in total LPG sales volumes. Meanwhile, gas generation for the wholesale segment declined 25% to 605 GWh.
At the same time, the Kupe oil and gas field continues to undergo strategic review. The company noted strong interest from potential buyers for Genesis’ stake. Coincidentally, The Australian Financial Review recently reported on natural gas beginning to get a bad rap with emission-conscious investors.
On a positive note, Genesis Energy’s renewable generation increased by 15% to 487 GWh – demonstrating the energy provider’s green shift.
Genesis share price snapshot
The Genesis share price has been trending upwards, returning 16% in the past 12 months. However, this is still an underperformance compared to the S&P/ASX 200 Index (ASX: XJO), which has increased by around 31% over the last year.
Despite the slowdown in customer growth, Genesis shares are still trading at a price-to-earnings (P/E) ratio of 38.9.
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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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