Channel Infrastructure NZ H1 Revenue Up 4% with EBITDA Guidance Upgraded
Channel Infrastructure NZ Limited reported a 47% rise in net profit for H1 2026, driven by expanded fuel storage capacity and upgraded EBITDA guidance, while declaring a 16% higher interim dividend.
- Net profit after tax rises 47% to NZD 18.18 million
- FY26 EBITDA guidance upgraded to NZD 103-108 million
- Interim dividend increased 16% to 7.25 cents per share
- 123 million litres of new jet and diesel storage commissioned
- Marsden Point Biorefinery equity raise delayed into 2027
Strong Profit Growth Amid Fuel Storage Expansion
Channel Infrastructure NZ Limited (NZX:CHI, ASX:CHI) delivered a robust first half in 2026, reporting a 47% jump in net profit after tax to NZD 18.18 million, up from NZD 11.63 million in the prior corresponding period. Revenue from continuing operations rose 4% to NZD 72.93 million, supported by contracted storage and terminal fees.
EBITDA edged up 1% to NZD 48.8 million, with an underlying 3% increase excluding the loss of a legacy lease. The company upgraded its full-year EBITDA guidance twice this year, now targeting NZD 103 million to NZD 108 million, reflecting stronger contracted revenue and greater visibility on fuel throughput volumes.
Fuel Security Projects Drive Storage Capacity Growth
Channel commissioned an additional 123 million litres of jet and diesel storage capacity at its Marsden Point terminal during H1, increasing in-service storage by approximately 40%. Notably, the New Zealand Government’s 93 million litre diesel storage project was delivered in just nine weeks, providing an extra nine days of diesel supply resilience for the country.
The Z Energy jet storage project was completed six months ahead of schedule and within budget, while the Higgins bitumen import terminal remains on track for completion in late Q4 2026 with an expanded contract scope. These projects underpin expected contracted earnings growth into FY27, with full-year contributions from these contracts estimated at around NZD 9 million, alongside NZD 14 million from the government diesel storage contract.
Marsden Point Biorefinery Project Faces Timing Uncertainty
The Marsden Point Biorefinery consortium, aiming to produce biodiesel, sustainable aviation fuel (SAF), and fertilisers, remains a key strategic initiative. Channel agreed to sell and remove a fully decommissioned CCR Platformer unit for US$5.95 million as part of enabling works. However, the consortium’s equity raising process is taking longer than initially expected, pushing the likely final investment decision into 2027.
Despite delays, credible potential equity providers remain engaged, and the project is seen as increasingly important for New Zealand’s fuel security and emissions reduction goals. Channel continues to act as landlord and provide ancillary infrastructure services for the precinct.
Financial Position Supports Dividend Growth and Capital Investment
The company declared a 16% higher interim dividend of 7.25 cents per share, payable on 24 September 2026, reflecting confidence in cash flow generation. Normalised free cash flow from operations was NZD 33.6 million, slightly down from the prior year due to maintenance capex phasing but maintaining a strong EBITDA to free cash flow conversion of 69%.
Capital expenditure surged to NZD 41.5 million for H1, more than double the prior period, driven by growth projects including government diesel storage and terminal upgrades. Maintenance capex remains on track at 8-10% of revenue for FY26.
Channel’s net debt increased modestly to NZD 346 million, with leverage and interest cover ratios comfortably within covenant limits. The company is reviewing refinancing options for a retail bond maturing in May 2027.
Strategic Focus on Energy Transition and Infrastructure Consolidation
Channel continues to pursue a selective growth strategy centred on the Marsden Point Energy Precinct, leveraging existing infrastructure to support New Zealand’s energy security and transition to lower carbon fuels. The company is exploring opportunities to repurpose storage tanks for renewable fuels and biofuels manufacture, including a memorandum of understanding with LanzaJet for an alcohol-to-jet facility.
Channel also owns a 25% stake in the Somerton jet fuel pipeline to Melbourne Airport and operates fuel testing laboratories, underpinning its role as a critical midstream energy infrastructure player in Australasia.
The company’s disciplined capital management, strong operational performance, and contracted revenue growth position it well to navigate ongoing global fuel supply disruptions and evolving market dynamics.
Bottom Line?
Channel’s upgraded guidance and dividend increase reflect confidence in contracted growth, but the timing of key renewable fuel projects remains uncertain.
Questions in the middle?
- How will delays in the Marsden Point Biorefinery equity raise affect Channel’s medium-term growth?
- Can Channel sustain its strong free cash flow conversion amid rising maintenance and growth capex?
- What impact will ongoing global fuel price volatility have on throughput volumes and variable fee revenue?
