APA Group (ASX:APA) share price plunges on flat earnings growth in FY21

Challenging the APA Group's share price, the company advised it had faced headwinds in FY21. This is reflected in its financial performance.

| More on:
A man faces a fork in the path in the bush before being plunged into the night's darkness holding only a gas lantern.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The APA Group (ASX: APA) share price is falling on Wednesday as the energy infrastructure business reported its FY21 earnings.

APA shares are down 1.76% at the time of writing to $9.79 a share.

Let's investigate further.

APA Group share price falls on flat revenue and EBITDA growth

The company outlined its progress over the year, with key takeouts including:

  • Revenue of $2,145 billion, a 0.7% growth year on year
  • Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $1,633 billion, a 1.3% decrease from the year prior
  • Net profit after tax (NPAT) of $3.7 million, down from $311.7 million a year ago
  • Free cash flow (FCF) down 5.7% over the year to about $902 million
  • Final distribution of 27 cents per security, up 2%, bringing FY21 total distributions to 51 cents per security

What happened in FY21 for APA Group?

Challenging the APA Group's share price, the company advised it had faced headwinds in FY21. This is reflected in its financial performance.

For example, underlying EBITDA contracted by over 1%. This was due to "increased investment in strategic development opportunities," as per the company.

However, it also stated this figure was down due to higher insurance and compliance costs, and "softer contract renewals in challenging market conditions".

In addition, it recognised NPAT of $3.7 million, a significant down step from $311 million in the year prior. APA stated NPAT was low due to impacts from the "$249.3 million non-cash Orbost impairment charge," alongside an additional $148 million in finance costs with APA's bond and debt maturity redemptions.

Moreover, FCF came in 5.7% behind FY20, explained by a "non-recurring benefit" that occurred last year.

Further, the company announced its final distribution of 27 cents per security. This totals for an FY21 distribution of 51 cents per security, a 2% increase.

Finally, APA's "organic growth pipeline" has now surpassed $1.3 billion, a $300 million gain from the year prior.

What did management say?

APA CEO Rob Wheals said:

In FY21, APA has again delivered stable and reliable earnings in challenging market conditions while at the same time making good progress on our strategy and laying the foundation for future growth.

Speaking on APA's end markets, Wheals added:

Importantly, gas continues to play a critical role in Australia's energy mix, both as a critical source of firming for variable renewable energy and helping ensure Australians will have access to a reliable, and affordable source of energy. Through our Pathfinder Program we have continued our investments in the energy solutions of tomorrow which have the potential to unlock the economic benefits from repurposing our infrastructure assets while ensuring we can continue to respond to the changing energy needs of our customers.

What's next for APA Group?

APA Group forecasts its FY22 distribution to expand by around 4% to 53 cents per security.

In addition, it estimates its "organic growth capex (capital expenditures) to exceed $1.3 billion" over the coming two years.

APA is also underway on its "sustainability roadmap" where it has an ambition of achieving "net-zero emissions" by 2050. According to the report, this program is "now embedded into strategy".

The APA Group share price has climbed 3.2% this year to date, well behind the S&P/ASX 200 Index (ASX: XJO) return of about 14% since 1 January.

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended APA Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Earnings Results

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

Up 74% in 2024, why is this ASX 200 stock rallying today?

Recurring revenues continue to grow.

Read more »

Man pointing at a blue rising share price graph.
Earnings Results

Guess which ASX All Ords share is soaring on 21% FY 2024 growth

Investors are piling into the ASX All Ords share today. Let’s find out why.

Read more »

Girl sliding down on snow with arms spread out.
Earnings Results

Elders shares on ice for a $475 million acquisition after profits plunge 55%

What on earth is going on with Elders shares today?

Read more »

A man has a surprised and relieved expression on his face. as he raises his hands up to his face in response to the high fluctuations in the Galileo share price today
Energy Shares

This ASX 200 mining stock just reported a 40% earnings jump

Investors appear pleased with this miner's performance during the first quarter.

Read more »

Business people discussing project on digital tablet.
Earnings Results

2 ASX All Ords shares surging over 10% on strong results

Investors are buying these shares in response to strong results this morning.

Read more »

A young woman holds her hand to her mouth in surprise as she reads something on her laptop.
Earnings Results

Xero share price rockets to record high on explosive half-year growth

The tech star delivered another impressive half year results this morning.

Read more »

A man cheers after winning computer game while woman sitting next to him looks upset.
Earnings Results

2 high-flying ASX 200 gaming shares splitting ways today

Which gaming giant is winning the admiration of investors amid results?

Read more »

Male building supervisor wearing high vis vest and hard hat stands and smiles with his arms crossed at a building site
Industrials Shares

This $23 billion ASX 200 stock is surging 6% while the market sinks. Here's why

This ASX 200 stock is shrugging off the wider market sell down today and racing higher. But why?

Read more »