Greencoat UK Wind Reports £72.4m Loss Amid Challenging Wind Conditions
Why we think this is bad
The half-year results paint a challenging picture for Greencoat UK Wind. The company swung to a significant loss of £72.4 million, a stark contrast to the profit reported in the same period last year. This was compounded by a 14% underperformance in energy generation due to low wind conditions, which is a key driver for the company's revenue. The Net Asset Value per share has also declined, reflecting lower cash generation and reduced power price forecasts. While the company has maintained its dividend policy, the high level of debt and mentions of 'headwinds' and 'challenging market conditions' in the outlook suggest ongoing pressures. The discount to NAV at which shares are trading indicates market concerns about future performance. Despite these challenges, the company's long-term strategy and maintained dividend offer some stability, but overall, the short-term outlook appears negative.
Key Points
- Reported loss of £72.4 million, down from £19.1 million profit last year
- Energy generation 14% below budget due to low wind conditions
- Net Asset Value per share decreased from 151.2p to 143.4p
- Maintained dividend at 5.18 pence per share
- High debt level of £2,254 million
- Management cites 'headwinds' and 'challenging market conditions' in outlook
Summary
Greencoat UK Wind's half-year results reveal significant challenges. The company reported a loss of £72.4 million, a stark contrast to the £19.1 million profit in the same period last year. Energy generation was 14% below budget due to low wind conditions, directly impacting revenue. The Net Asset Value per share decreased from 151.2p to 143.4p, reflecting lower cash generation and reduced power price forecasts. Despite these headwinds, the company maintained its dividend at 5.18 pence per share, in line with its RPI-linked growth policy. The company's high debt level of £2,254 million could be a concern in the current economic climate. Management noted 'headwinds' and 'challenging market conditions' in their outlook, suggesting ongoing pressures. While the long-term strategy remains intact, the short-term outlook appears challenging.