From bad to worse for Renergen

Renergen’s share price fell by as much as 3.45% today, as the gas producer reported high revenue but a significantly deeper loss for the six months through August.

Renergen released its results for the six months ended 31 August 2024 on Thursday, which revealed a disappointing performance for the company.

While its revenue increased by nearly 8% to R25.61 million, its costs nearly doubled, going from R13 million to R24.73 million – a 90% increase.

This saw the company’s gross profit plummet, falling from R10.76 million in 2023 to R882,000, reflecting a 92% decline.

The company’s operating loss deepened to R65.13 million, while its total loss for the period deepened by 63% to R70.71 million.

Renergen’s basic and diluted loss per share also deepened by over 50% to 45.73 cents.

The company explained that its liquid natural gas (LNG) production during the period totalled 2,388 tonnes, down slightly from 2,386 in the prior period. 

Therefore, its revenue increased due to LNG price increases rather than increased production.

Renergen further explained that the deepening of its loss was broadly the result of a reduction in gross profit contribution, higher operating costs, higher interest expenses, and lower deferred tax credits. 

However, it said these factors were offset by a higher other operating income, mainly consisting of foreign exchange gains and lower share-based payment expenses. 

Renergen also announced that its net tangible asset value per share increased by 52.1%, and attributed this growth to “further investments in property, plant and equipment”.

These disappointing results follow an announcement Renergen made in mid-August this year, wherein it said that its liquid helium production training is now fully operational, and the company plans to start selling helium to customers soon.

The company said it had been accumulating LHe inventory for sale to its customers, whose Iso-containers were scheduled to arrive later that month for filling.

It said that, since 19 July 2024, the plant had been producing LHe, initially utilising the output to cool the vacuum jacketed pipelines and the inline helium storage tank to around 4.5 kelvin, a prerequisite to ensure that LHe from the helium separator once sent to storage remains liquid. 

In its interim results, the company did not provide details on these helium sales.