LGI Faces Profit Pressure Amid Major Power Station Expansions
LGI Limited reported a 7% rise in revenue and a 3% increase in EBITDA for H1 FY25, driven by expanded power generation capacity and higher landfill gas flows. However, net profit after tax declined by 22%, reflecting ongoing investment and market dynamics.
- Revenue increased 7% to $16.9 million in H1 FY25
- EBITDA rose 3% to $7.3 million despite a 22% drop in NPAT
- Canberra power station capacity expanded by 50% with two new 1MW generators
- ACCU creation grew 7% to over 227,000 units
- Interim dividend declared at 1.2 cents per share, fully franked
Sustained Growth Amid Strategic Expansion
LGI Limited (ASX: LGI), a leader in landfill gas recovery and renewable energy generation, has released its half-year results for the period ending December 31, 2024. The company demonstrated steady operational progress with total revenue climbing 7% year-on-year to $16.9 million, supported by a 5% increase in landfill gas flows and a 7% rise in renewable energy output.
Despite these gains, statutory net profit after tax (NPAT) fell 22% to $2.4 million, a decline attributed to increased depreciation and interest expenses linked to ongoing capital investments. Statutory and underlying EBITDA, however, improved by 3% to $7.3 million, reflecting solid core earnings resilience.
Operational Highlights and Capacity Expansion
Key operational achievements include the successful commissioning of two additional 1MW Jenbacher generators at LGI's Canberra power station, boosting its generation capacity by 50%. This expansion was complemented by a significant upgrade in grid connection capacity from 4MW to 20MW, facilitated by new underground cabling infrastructure. These enhancements position LGI to integrate battery storage solutions, with a 14MW Tesla battery order slated for delivery in H1 FY26.
LGI also reported increased biogas collection capabilities, installing 37 new wells at Canberra and 32 at the Eastern Creek site in Sydney, where construction of a new power station is progressing on schedule. These developments underpin LGI’s strategy to 'chase the gas' and maximize renewable energy generation potential.
Strategic Business Development and Market Position
The company secured new contracts with several regional councils, including Lithgow, Southern Downs, Midcoast, and Western Downs, expanding its portfolio to 32 projects across Queensland, New South Wales, and the Australian Capital Territory. LGI’s ability to offer low-cost gas management and carbon abatement solutions continues to resonate with landfill owners, aligning with rising demand for Australian Carbon Credit Units (ACCUs), which grew 7% to 227,334 units in the half.
LGI’s CEO, Jarryd Doran, highlighted the company’s dual focus on maintaining operational excellence while advancing major infrastructure projects. He noted the strong performance of the Bunya battery system, which exceeded financial forecasts and demonstrated rapid response capabilities, reinforcing LGI’s confidence in expanding battery deployments.
Financial Outlook and Dividend
LGI declared a fully franked interim dividend of 1.2 cents per share, signaling confidence in its cash flow generation. The company reaffirmed its FY25 guidance, anticipating underlying EBITDA growth of 12% to 15% over FY24, contingent on market conditions and project timing.
Looking ahead, LGI is focused on scaling flexible electricity capacity to 21MW by the end of FY25 and 35MW by mid-FY26, leveraging battery storage and generation assets to navigate the evolving energy market landscape.
Bottom Line?
LGI’s blend of operational growth and strategic investment sets the stage for a pivotal year as it balances near-term profitability with long-term capacity expansion.
Questions in the middle?
- How will LGI manage the impact of rising interest and depreciation costs on future profitability?
- What are the risks and timelines associated with the Eastern Creek power station’s completion?
- How will increasing volatility in electricity markets affect LGI’s revenue streams and battery deployment strategy?
