EBITDAF fell 22% as electricity gross margin compressed 1,320bps

EBITDAF fell 22.2% to $407.2m, PBT fell 29.8% to $191.1m, and NPAT fell 33.0% to $131.1m. The effective tax rate rose to 31.4% from 28.1%, so PBT is the cleaner operating read.

Operating cash flow rose 4.1% to $439.8m, but capex jumped 77% to $143.7m. Net debt eased slightly to $1.3b, yet net debt to EBITDAF weakened to 3.09x from 2.5x on the lower earnings base. The full-year dividend was 14.0cps versus 17.6cps prior.

Electricity revenue grew to $2.6b but segment gross margin fell to $559.7m from $669.7m, with the implied gross margin rate down roughly 1,320bp. For a gentailer, that signals higher generation costs (the HY24 release flagged lower-than-normal hydro driving thermal cost) feeding through faster than retail and contracted prices. This matters because the 28.4% revenue print is largely wholesale-cost pass-through, not real growth.

Dividend exceeded earnings while returns halved. ROE fell to 4.9% from 8.1%, and the 14.0cps full-year distribution implies a payout of 114.7% of NPAT (95.0% prior). Payout ratio versus pre-lease FCF is suppressed pending source-backed cash-dividend verification.

Leverage moved the wrong way despite higher operating cash. Net debt to EBITDAF rose to 3.09x because EBITDAF fell faster than borrowings, even as the cash balance more than tripled to $192.8m. That reduces headroom heading into a capex-heavier phase.

The HY24 split shows EBITDAF was almost evenly weighted across halves (HY24 took 49.6% of full-year EBITDAF), but NPAT was H2-weighted (HY24 was only 29.2% of full-year NPAT), implying the second half carried disproportionate after-tax earnings while the margin pressure persisted at the EBITDAF line throughout the year.

The gap that matters is hydrological and fuel cost normalisation. Without disclosed forward hedge or generation-mix assumptions, the release does not support a view on when electricity gross margin returns toward the prior 34% range, which is the single biggest swing factor for FY25 earnings and dividend cover.

Inventories fell from $143.0m to $87.5m and operating working capital released about $30.3m, both of which lifted operating cash flow above the deteriorating earnings line. Inventory days dropped from 22 to 10.5, which is a one-time tailwind that does not repeat at the same scale.

Beneath that, durable cash generation actually weakened: FCF pre-lease fell to $296.1m from $341.4m as capex rose 77% to $143.7m (4.7% of revenue versus 3.4% prior). The reported 225.8% FCF-to-NPAT ratio looks flattering, but the right read is that NPAT is depressed by margin compression while capex is rising, not that free cash flow is structurally improving.

• Working-capital release: roughly $30.3m supported OCF.
• Inventory drawdown: $55.5m, lifting cash but a non-recurring shape.
• Capex step-up: from $81.2m to $143.7m, absorbing the earnings shortfall.

This briefing cannot assess forward hydrology, hedge-book positioning, or any quantified FY25 EBITDAF or dividend guidance, none of which are disclosed in the supplied material.