TrustPower pushes margins, sheds customers - earnings up 16%

BUSINESSDESK: TrustPower, the utility controlled by Infratil, boosted underlying annual profit 16%, achieving wider margins while shedding customers in a tight retail market.

Underlying earnings, which strip out one-off impairment charges and changes in the fair value of assets, rose to $135.5m in the 12 months ended March 31, from $116.5m a year earlier, the company said.

Net profit rose to $131.7m, or 41.8 cents per share, from $112.4m, or 35.6 cents per share.

Total revenue rose 5.4% to $807.1m, with a 5.6% gain in electricity revenue to $763.6m.

That was even as its customer numbers fell to 209,000 as at March 31 from 221,000 a year earlier.

"While retail market remains highly competitive, TrustPower continues to experience lower levels of customer churn than the market," the company said.

"Over the last four months of the financial year, TrustPower refrained from actively acquiring customers to ensure a seamless transition for the replacement of its core customer billing and information system."

The company sold 3960 Gigawatt Hours of electricity in New Zealand, down from 4033 GWh a year earlier. It boosted generation production 13% to 2582 GWh.

"TrustPower expects electricity prices will become more volatile over time and consequently generation capacity which is able to meet peak demand will become more valuable." 

With many of its hydro-generation assets near peak capacity, it has embarked on a review to "identify potential enhancement opportunities that can increase peaking capacity in the short-to-medium term".

Last week, TrustPower finalised conditional agreements to expand its 100 megawatt Snowtown Wind Farm in South Australia, and entered into a long-term supply arrangement with Contact Energy's majority shareholder, Origin Energy of Australia.

TrustPower's board declared a final dividend of 20 cents per share, taking the annual payout to 40 cents, up from an annual 38 cents in 2011.

The company has $108.5m of subordinated bonds maturing in September, and it expects to make an offer to roll-over the debt with existing holders at its maturity in combination with a retail market offer.

The shares rose 0.3% to $7.72 in trading today, and have gained 7% this year.