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Zenith Energy (ASX:ZEN) - Managing Director, Hamish Moffat
Managing Director, Hamish Moffat
Sourced: Business News
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  • In a new market update, power producer Zenith Energy (ZEN) has upgraded its earnings guidance but downgraded its revenue forecast for FY20
  • The company says its core business, which involves supplying power to remote locations, remains largely unaffected by the COVID-19 pandemic
  • As a result, Zenith Energy has seen increased energy usage across several sites and commissioned two gas projects ahead of schedule — tacking an extra $3 million onto its full-year earnings guidance
  • However, reduced demand for energy performance contract (EPC) work in FY20’s second half has seen Zenith reduce its revenue forecast to between $59 million and $60 million, instead of $62 million to $64 million
  • Zenith Energy’s share price is up 0.5 per cent, trading for $1.01 per share in mid-morning trade

In a new market update, power producer Zenith Energy (ZEN) has upgraded its earnings guidance but downgraded its revenue forecast for FY20.

The company’s core business is supplying power to remote locations. Fortunately, operations in this area have continued largely unaffected throughout the COVID-19 pandemic. This is thanks to Zenith, which made proactive changes to offset the impacts of travel restrictions and supply chain disruptions.

When the pandemic hit, the company moved to locate staff in remote areas in order to serve customers while complying with regional travel constraints. Zenith also acted quickly to secure a supply of spare parts and consumables, allowing the company to meet its operating requirements for this financial year.

On November 11, 2019, Zenith released its market guidance for the year ending June 2020.

Zenith expects that the previous guidance of $62 million to $64 million in revenue will drop to $59 million to $60 million. The company attributed this to lower energy performance contract work in the second half of FY20 as well as the expiry of a contract to manage, operate and maintain the Phosphate Hill manufacturing plant.

Despite reduced annual revenue, Zenith expects to report an increase in its underlying earnings before interest, taxes, depreciation, and amortisation (EBITDA). Its previous guidance projected an underlying EBITDA of $26 million to $27 million. Now, the company now predicts an underlying EBITDA of approximately $30 million.

Zenith attributes this improvement to increased power consumption at a number of its sites. Additionally, its Jundee stage four and Daisy Milano stage three gas projects were commissioned ahead of schedule.

Despite the earnings forecast increase, the coronavirus outbreak still ongoing, so the company is wary that its forecasts may be impacted again in future. However, Zenith maintains it’s taken extra care to consider its accomplishments to date in line with the remaining balance of this financial year.

Zenith Energy’s share price is up 0.5 per cent, trading for $1.01 per share in mid-morning trade at 11:20 am AEST.

ZEN by the numbers
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