Contact reports rise in earnings, with outlook impoving

Contact has reported a rise in EBITDAF of $5 million for the half year, despite a tough retail environment.

The company's statutory profit was $68 million, Contact's interim financial results show, although its underlying earnings after tax were down $2 million to $76 million.

At a presentation of the company's results for the six months to December 31, 2011, Contact chief executive Dennis Barnes said the EBITDAF result reflected an improved electricity business segment pefformance, despite an unfavourable generation mix and a highly competitive retail market.

Contact's electricity segment EBITDAF was up $8 million to $211 million, a 4% rise.

Increased profit from hedged and exposed generation were up $6 million and $7 million respectively, which was offset to some degree by a $5 million or 34% drop in the company's retail earnings, due to lower mass market volumes, increasing network costs and line losses more than offsetting the benefits of price increases and growth in 'time of use' sales.

Mr Barnes said Contact had reversed significant customer losses that it experienced last July and August, with customer numbers rising for the last four months of the year.

He expected that trend to continue.

Contact's large capital projects remained on track, Mr Barnes said, with its Te Mihi steamfield and Wairakei bioractor on target for delivery in August this year.

The government's plans to sell shares in four state-owned energy companies would not negatively affect Contact's investment plans, he said, as if those companies had greater access to capital, it would show the industry as a whole could provide good returns.

"If it's a quality project and the time is right for it, you'll find the capital," Contact chief financial officer Mark Elliott said at the presentation.

Mr Barnes said the second half of the financial year looked positive for Contact.

"EBITDAF in the second half of the financial year is expected to benefit from retail price rises, including seasonally higher prices for time of use customers and an increase in contract for difference sales volumes," he said.

Contact has announced a dividend of 11 cents a share.