Release Date: August 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Solid financial performance with earnings and distributions in line with guidance.
- Recent investments, such as Pilbara Energy and Basslink, are delivering returns as expected.
- Successful refinancing of a significant amount of debt, maintaining a strong balance sheet.
- Progress in business development activities, including new agreements with CS Energy.
- Improved safety performance and increased representation of women in the workforce.
Negative Points
- Higher interest costs expected in FY25 due to refinancing $1.7 billion of debt.
- Increased tax payments anticipated as accelerated depreciation allowances are fully utilized.
- Net profit after tax decreased due to higher depreciation, amortization, and interest costs.
- Uncertainty around regulatory changes could impact future investments and returns.
- Free cash flow relatively flat year-on-year, with expectations of continued pressure from higher debt costs and tax payments.
Q & A Highlights
Q: Could you remind us what the East Coast Grid Stage 3 expansion was going to look like? Is it possible to do that under a greenfield exemption and have it in parallel to the regulatory process?
A: The East Coast Grid is viewed as a network, not asset by asset. The expansion involves addressing bottlenecks with compression along various parts of the network. We were ready to proceed but paused due to regulatory uncertainty. If light-handed regulation continues, we will proceed early next year.
Q: With your debt refinancing coming up, could you give us some guidelines on the plans and the currency hedging impacts against the WGP?
A: We are well-positioned for refinancing. The sterling notes maturing in November and the March US dollar maturities are fully hedged back to Aussie dollars. New 10-year debt pricing is around 6.5% all-in swap back to Aussie pricing.
Q: Did the Ethane Pipeline make an EBITDA contribution this year?
A: No revenue was recognized for the Ethane Pipeline in FY24. We wrote off any revenue recognized through the year, especially post-administration announcement.
Q: Are the underlying businesses able to achieve CPI growth, or are we tracking below CPI?
A: We can generate inflation-linked revenues consistent with CPI. Demand is strong, and assets like SWQP, MSP, and RBP are fully contracted. Some smaller movements, like the Moomba Sydney Ethane Pipeline and Diamantina, impact results.
Q: How are you seeing the outlook for free cash flow and gearing? Are we gearing up over the next couple of years?
A: Free cash flow will be relatively flat into FY25 due to higher debt costs and normalized cash tax payments. We expect it to grow as these items normalize and new assets contribute. Our target FFO to debt is around 9.5%.
Q: Can you confirm how much of the $1.8 billion growth CapEx over the next three years is currently committed?
A: A significant portion is committed, especially for FY25. Projects like Kurri Kurri lateral, CS Energy works, and Pilbara solar and battery projects are in-flight and committed.
Q: How are customers approaching contracting at the moment?
A: There's a shift towards longer-term contracts for infrastructure development. Shipping contracts are shorter-term, around 18-36 months, due to market dynamics. Demand remains strong, with no deterioration in pricing.
Q: Can you provide an update on the $3 billion Pilbara project pipeline?
A: We're developing the Port Hedland Solar and Battery project for BHP. We have good sites in Port Hedland and Newman and are working closely with customers. We hope to announce new projects over the next 12 months.
Q: Are there any noticeable personnel turnovers at Alinta since the acquisition?
A: No significant personnel turnover. The team has remained intact, and we've increased the development team size. The integration has been positive.
Q: How are you balancing growth funding, debt repayment, and DPS growth?
A: We balance our cash flow projections, recontracting expectations, and balance sheet position to ensure a glide path across our capital allocation framework. We remain committed to our current credit ratings.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
