Channel Infrastructure reported steady FY25 financials with record throughput and key project progress, while raising dividends and expanding into Australia via a strategic pipeline stake.
- Stable FY25 revenue at $140.2 million with pro-forma EBITDA up 4% excluding legacy lease
- Record Q4 jet fuel throughput at Marsden Point, highest since 2019
- Z Energy jet storage and bitumen import terminal projects on track for H2 2026 completion
- Strategic 25% acquisition in Somerton jet fuel pipeline to Melbourne Airport
- Dividend payout ratio increased to 70-90%, final dividend up 18% to 6.75 cents per share
Solid Financial Performance Amid Operational Milestones
Channel Infrastructure, New Zealand’s largest fuel import terminal operator, has delivered a robust financial performance for the year ended 31 December 2025. Revenue held steady at $140.2 million, while EBITDA was slightly down to $93.4 million, though a pro-forma adjustment excluding the expiry of a legacy lease shows a 4% increase. The company’s free cash flow conversion improved to 72%, underpinning a healthy balance sheet and enabling an 18% increase in total dividends to 13.0 cents per share.
Operationally, Channel achieved its highest quarterly jet fuel throughput since 2019, with Q4 throughput at Marsden Point reaching record levels. This reflects a recovering aviation sector and growing demand, despite ongoing aircraft availability challenges faced by Air New Zealand.
Progress on Strategic Growth Projects
Channel’s growth pipeline remains strong, with key infrastructure projects advancing on schedule. The Z Energy jet storage project, set to become New Zealand’s largest jet fuel tank, is ahead of schedule for completion in Q3 2026. Similarly, the Higgins bitumen import terminal is progressing well, targeting completion by the end of 2026. These projects are expected to contribute significant incremental revenue over their contract terms.
Further bolstering its strategic footprint, Channel acquired a 25% stake in the Somerton jet fuel pipeline servicing Melbourne Airport. This move marks Channel’s first step into the Australian market, positioning it to benefit from Melbourne Airport’s growth trajectory, including a planned third runway and record passenger volumes. The acquisition complements Channel’s existing assets and offers potential for further consolidation and infrastructure upgrades in the region.
Focus on Energy Transition and Infrastructure Resilience
Channel continues to prioritise its role in New Zealand’s energy transition. The Marsden Point Biorefinery project, aimed at producing sustainable aviation fuel, has gained momentum with the addition of Air New Zealand to the consortium alongside Qantas and other partners. Engineering and financing preparations are underway, with a final investment decision anticipated later this year. This initiative aligns with Channel’s broader vision to support lower-carbon fuel solutions and enhance national fuel security.
Meanwhile, Channel is investing $30 million in critical infrastructure upgrades at Marsden Point to support the Energy Precinct redevelopment, including modernising control facilities and administration buildings. The company also completed front-end engineering design for a diesel-powered electricity peaking plant, though development is currently paused pending government decisions on LNG import facilities.
Capital Management and Market Access
Reflecting confidence in its outlook, Channel updated its capital allocation framework, increasing the dividend payout ratio to 70-90% of normalised free cash flow and broadening its target credit rating range to BBB/BBB+. The company’s successful ASX listing in December 2025 has expanded its investor base, providing greater access to capital to support ongoing growth initiatives.
Looking ahead, Channel has guided FY26 EBITDA to $95-100 million, with maintenance capital expenditure expected at 8-10% of revenue and free cash flow conversion remaining stable. The company’s strategic focus remains on delivering the Marsden Point Energy Precinct and exploring measured growth opportunities in New Zealand and Australia.
Bottom Line?
Channel Infrastructure’s steady financial footing and strategic expansions set the stage for growth, but execution risks and market dynamics warrant close investor attention.
Questions in the middle?
- How will government decisions on LNG import facilities impact Channel’s diesel peaking plant project?
- What are the prospects and timelines for the Marsden Point Biorefinery reaching final investment decision?
- Could further acquisitions in Australia or New Zealand accelerate Channel’s growth beyond Marsden Point?