IFN

Australia's Infigen forecasts "materially lower" earnings

Credit: REUTERS/DAVID GRAY

Australian takeover target Infigen Energy on Monday warned revenue and earnings would be "materially lower" in the current financial year as it grapples with a substantial drop in wholesale electricity prices due to the coronavirus crisis.

Recasts and updates throughout with more detail from company statement

Aug 3 (Reuters) - Australian takeover target Infigen Energy IFN.AX on Monday warned revenue and earnings would be "materially lower" in the current financial year as it grapples with a substantial drop in wholesale electricity prices due to the coronavirus crisis.

Infigen, which is the focus of a bidding war between Spanish utility firm Iberdrola IBE.MC and Philippine conglomerate Ayala Corp AC.PS, also suspended the payment of dividends indefinitely.

"The effect of the economic crisis created by COVID-19 is expected to result in continuing low electricity prices resulting from lower overall demand and oversupply," Infigen said in a statement.

The wind and solar firm said that oversupply was being exacerbated by delays to generator maintenance because of coronavirus-spurred movement restrictions.

"The short-term effect ... is an expected reduction in the net revenue and net income of Infigen’s renewable energy assets and fast-start, firming assets," the company said.

"Infigen believes that there will be a return to normal operating conditions once the COVID-19 pandemic is contained and that the inexorable exit of thermal generation will continue," it added.

In the statement ahead of detailed 2020 fiscal year earnings due on Aug. 20, Infigen said it expected to book non-cash losses of A$15 million to A$20 million on its contracted assets as well as non-cash losses of A$17 million to A$19 million resulting from interest rate swaps on loans.

Infigen said it continued to support Iberdrola's bid. The Spanish company last month raised its offer price to A$0.92 per share, or around A$893.1 million ($637.94 million). Fellow suitor has held its offer at A$0.86 per share.

($1 = 1.4002 Australian dollars)

(Reporting by Shriya Ramakrishnan in Bengaluru; Editing by Jacqueline Wong and Jane Wardell)

((Shriya.Ramakrishnan@thomsonreuters.com; +91 8061822842 ;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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