Genesis Energy [NZX: GPLFA], the state-owned power company slated for partial privatisation this year, reported a 23 percent drop in first-half operating earnings, reflecting stiff retail competition and a warm winter, which meant hydro-storage was above average wholesale prices were lower.
But the company still increased its interim dividend as the sale of up to 49 percent of the government's shareholding in the country's largest power company by customer numbers looms in the early part of this year.
Earnings before interest, tax, depreciation, amortisation and fair value changes in financial instruments fell to $150.5 million in the six months ended Dec. 31 from $195.9 million a year earlier, the Auckland-based company said in a statement.
Net profit, which includes movements in the value of financial instruments and is not a good indicator of underlying performance, slumped 72 percent to $19.7 million, while revenue fell 6 percent to $973.1 million.
The interim dividend payment to the government will rise to $64 million from $57 million a year earlier.
"The company has held its market share in electricity and gas retailing, despite intense competition, particularly from smaller retailers, and has grown customer accounts by two per cent," chair Jenny Shipley said. "When the 'one-off' costs over the first half year are taken into account, the board believes that the company is responding well to the commercial challenges it faces and is confident in its ability to pay an interim dividend of $64 million."
The Genesis part-sale is expected to raise between $700 million and $1 billion. The partial privatisation programme has had mixed success after an Opposition proposal to overhaul the electricity market saw traders discount the value of the power companies, accompanied by growing recognition that New Zealand has excess generation capacity that may last some years, keeping a lid on prices.
Genesis incurred a $2.4 million charge in preparing the company for its listing this year.
Customer numbers rose 1 percent to 534,597 in the half, giving it about 27 percent of the market, while gas customers rose 4 percent to 115,613, or 44 percent of the market. LPG customers rose 28 percent to 10,739.
The average retail electricity purchase price dropped 19 percent to $53.98 per megawatt hour due to the weaker wholesale market, and the average price received for generation declined 16 percent to $54.55MWh with lower retail demand and increased storage in hydro-lakes as a result of the mild winter.
Genesis's thermal generation dropped 17 percent to 1,875 gigawatt hours, with coal generation down 61 percent as the company winds back use of the ageing Huntly power station, which can also run on natural gas. The company recently restructured contracts for coal for Huntly, ending imports from Indonesia.
Renewable generation was down 3 percent to 1,468 GWh, and total generation fell 12 percent to 3,344 GWh.