MRP flags Chilean geothermal costs, keeps guidance unchanged

At its second annual meeting since the government-controlled business sold 49% of its shares to a mix of local and offshore investors.

See also: Mighty River shareholders disgruntled at director fee hike

Electricity generator and retailer MightyRiverPower [NZX: MRP] has signalled it may face additional costs associated with its Chilean geothermal assets, for which it has failed to find a buyer and may require spending on site remediation, chief executive Fraser Whineray told the company's annual meeting in Auckland.

At its second annual meeting since the government-controlled business sold 49% of its shares to a mix of local and offshore investors, Mr Whineray said guidance on earnings before interest, tax, depreciation, amortisation and changes in the value of financial instruments was unchanged at between $490 million and $515 million for the 2016 financial year.

While the assumed high level of hydro generation had occurred during the first part of the current year, "wholesale pricing has been lower due to higher national storage," Mr Whineray said. Retail market competition remained intense.

Reporting on MRP's decision to get out of international geothermal developments, Mr Whineray said its German assets had been sold but no buyer had emerged for its Chilean interests.

"We may need to remediate sites where geothermal exploration activity has been undertaken, which could result in one-off provisioning in this financial year," he said, giving no sense of the size of that potential cost and promising an update at the half-year earnings announcement in February.

MRP's shares rose 1.1% to $2.80, and have shed 6% so far this year.

(BusinessDesk)