MRP affirms forecast earnings growth, bemoans focus on falling share price
MightyRiverPower, the first state-owned energy company partially privatised by the government this year, affirmed its expectations for annual earnings growth of 27 percent, while bemoaning the scrutiny its falling share price has come under since listing in May.
The Auckland-based company expects to meet its prospectus forecast earnings before interest, tax, depreciation, amortisation and fair value adjustments of $498 million in the year ending June 30, 2014, and anticipates paying a first-half dividend of 5.2 cents per share.
"We remain comfortable with our exceptionally strong forecast growth in operating earnings, with EBITDAF up 27 percent to $498 million, based on the additional earnings contribution from the new Ngatamariki geothermal plant and the absence of the one-off cost impacts seen in FY2013," chief executive Doug Heffernan told shareholders.
"Despite hydro volumes in the first quarter being down 34 percent year on year, we have used the flexibility in our portfolio to achieve market-leading prices for our generation, even while the cost of buying wholesale electricity for our customers was well below plan," he said.
The power company lifted net profit guidance $35 million to $195 million due to changes in the value of its financial instruments and cheaper than expected interest costs, while cutting forecast operating cash flow to between $300 million and $320 million due to a bigger tax bill from its new Ngatamariki station. It had previously expected cash flow of $328 million in its prospectus.
Forecast capital expenditure was cut to between $125 million and $175 million from $199 million in the offer document, to reflect lower spending on the company's international geothermal investments, and potentially a small lift in investment in its smart metering business, Metrix.
Last month MRP embarked on a $50 million share buyback to help prop up its share price which has been trending down since its listing in May. The stock fell 1.4 percent to $2.18, and has shed 13 percent since joining the NZX.
Chair Joan Withers told shareholders there had been "a lot of external and political focus on what is often referred to in short hand as 'poor MRP performance' when the commentary is actually relating to our company's share price post IPO."
That decline reflects the market view, but "at times there appears to be no clear connection between how a company is performing and how its shares are trading," Withers said. "What this board and management team is fundamentally focused on is driving long-term value for our shareholders."
Withers said the board has engaged an executive search firm to find a replacement for outgoing CEO Heffernan, and will potentially look at internal candidates.