TrustPower 1H earnings fall 8％ amid lower generation; shares drop

TrustPower [NZX: TPW], the utility controlled by Infratil, reported an 8 percent decline in first-half underlying earnings as the power company faced lower hydro-generation and thinner margins in a competitive retail environment. The shares fell.

Underlying earnings, which strip out one-time items, fell to $68.9 million in the six months ended Sept. 30 from $76.2 million a year earlier, the Tauranga-based company said in a statement. Net profit rose 11 percent to $77.2 million due to a $10.1 million gain in the value of the group's interest rate hedges. Revenue declined 4.6 percent to $418.7 million.

"The group operating performance was satisfactory given lower New Zealand generation production and a challenging retail environment, where pressure on margins and lower customer demand was experienced," chairman Bruce Harker said.

"Despite the current challenging New Zealand electricity environment which includes intense retail competition, an oversupplied generation market and regulatory uncertainty, the board is confident that Trustpower is well placed to regain earnings momentum once the Snowtown Stage 2 Wind Farm is completed and other quality renewable generation and irrigation development opportunities are able to be progressed," he said.

The board declared a first-half dividend of 20 cents per share, unchanged from a year earlier, payable on Dec. 13 with a Nov. 29 record date.

The shares fell 1.2 percent to $6.70, and have shed 20 percent this year.

TrustPower reported a gain in electricity customer numbers to 218,000 from 206,000 a year earlier, and a 10,000 gain in its telecommunications service customers to 48,000. The company gained 10,000 gas customers when it bought Energy Direct New Zealand for $17.1 million in July.

The power company's total New Zealand generation production shrank to 1,218 gigawatts per hour from 1,292 Gwh a year earlier, mainly due to a 28 percent decline in its North Island hydro-plants to 313 Gwh. North Island wind generation climbed 14 percent to 290 Gwh.

TrustPower said work at its Snowtown state 2 wind development in South Australia is progressing ahead of schedule and on budget, and is approval applications for close to 1,0000 megawatt production for three developments in each of Victoria, New South Wales and South Australia.

If it's successful in its joint proposal for the Ruataniwha scheme alongside Ngai Tahu, the company expects it will have to invest between $50 million and $60 million of the total $265 million cost of the project.

(BusinessDesk)