Operating results for the third and fourth quarters were soft due to an unplanned outage of the Tekapo B hydro electric power station, plant outages at Kupe and rough retail conditions. Those problems were well flagged by management at the interim result in February, he said.
Morningstar maintained its operating profit forecast of $358millon, representing growth of 7% from last year thanks to a good first-half performance.
The $2.10 share price fair value estimate was unchanged and Mr Atkins considered Genesis modestly overvalued at current prices.
''We forecast mid-single-digit operating profit growth for the medium term on recent acquisitions, cost-out initiatives, the rolling off of unfavourable gas contracts and growth of the lpg business.
''Our main concerns are risks to earnings from oil price exposure, the eventual decline of Kupe and above average gearing.''
Renewable generation in the fourth quarter was down 13% on the previous corresponding period (pcp) as the unplanned Tekapo B outage continued to take its toll, he said.
Tekapo B returned to service in early June. With high lake storage levels, the generator should contribute strongly through the rest of the winter.
For the full financial year, renewable generation volumes were down 3%. However, the generation division should report a strong fiscal 2018 result thanks to a 51% in wholesale prices and a 24% increase in gas and coal-fired power generation.
The retail division was not performing as strongly, Mr Atkins said.
Electricity and gas customer numbers were down 2% on last year. Modest price increases were unlikely to offset higher marketing and sales costs.
The main highlights were the 36% growth in commercial and industrial sales volumes and 134% growth in bottled lpg sales after the Nova acquisition, he said.
Kupe's fourth-quarter performance was soft. Gas production was down 13% on the pcp due to a plant outage and lower generation demand. Oil production was also weaker.
Full-year earnings should grow strongly because of the increased stake in the oil and gas field.
For the full year, gas production rose 26% and oil sales rose 12%.
''Unfortunately, Genesis won't benefit materially from recent oil price strength given its
policy of hedging most future
oil sales.''
Morningstar estimated Genesis would receive an average price of $US57 ($NZ84) per barrel in the 2018 financial year, leaving plenty of upside to earnings if the oil price stayed near current levels of $US71.
