Long-time holding within the ASX Blue Chip portfolio, Woodside Energy’s (WDS) has this morning released first-half results for 2024 highlighting strong operational performance amidst a challenging macroeconomic environment with shares up 2.88% outpacing the 0.28% gain for the ASX200.
The company posted a net income of $1.94 billion, marking an 11% increase compared to the same period last year. This growth in net income was underpinned by disciplined cost management and robust production levels, which offset some of the impacts from lower commodity prices and reduced sales volumes.
However, the company’s operating revenue fell by 19% to $5.99 billion, a significant drop that reflects the challenges posed by weaker global energy markets. Despite this decline in revenue, Woodside successfully managed to more than double its free cash flow to $740 million, up from $314 million in the previous year. This surge in free cash flow underscores the company’s strong focus on capital efficiency and its ability to generate substantial cash from its operations, even in a difficult market environment.
Return on equity also improved, rising to 11% from 9.7% a year earlier, indicating that Woodside has been able to enhance profitability through effective management of its equity base. However, underlying profit, which excludes certain non-recurring items, fell by 14% to $1.63 billion. This decline highlights the ongoing pressures within the energy sector but also reflects Woodside’s ability to navigate these challenges while maintaining solid financial health.
Woodside’s production guidance for the full year remains unchanged, with first-half production reaching 89.3 million barrels of oil equivalent (MMboe). The company has also reduced its unit production costs to $8.3 per barrel of oil equivalent, down from $8.8 per barrel in the first half of 2023, demonstrating effective cost control in an inflationary environment.
In terms of shareholder returns, Woodside declared an interim dividend of 69 cents per share, which is at the top end of its payout range, though slightly lower than the 80 cents per share distributed in the previous year. This decision reflects a balance between rewarding shareholders and maintaining financial flexibility to support ongoing capital projects.
Strategically, Woodside’s key projects, including the Scarborough Energy Project, are progressing well. The Scarborough project is now 67% complete, with first LNG cargo expected in 2026, reinforcing Woodside’s growth outlook.
As a reminder, WDS’ inclusion in the ASX Blue Chip portfolio is based on dividend yield, which at 11.29% sits among the highest in the ASX50 and it is unlikely WDS would be removed from the portfolio anytime soon.
