Contact Energy blamed wet weather for a 6% fall in its underlying net earnings to $150 million for the June 2010 year.The company said its earnings before interest, tax, depreciation, amortisation, and financial instruments (ebitdaf) were $427 million, do
Contact Energy blamed wet weather for a 6% fall in its underlying net earnings to $150 million for the June 2010 year.
The company said its earnings before interest, tax, depreciation, amortisation, and financial instruments (ebitdaf) were $427 million, down 4% from $445 million in 2008-9.
Wet conditions during the financial year came at a time when Contact was contractually obligated to pay for gas that it was unable to use in its gas-fired power stations, because of the amount of hydro generation available.
The profit was at the lower end of market expectations.
Contact announced a dividend of 14c a share, resulting in a total distribution of 25c per share – down 3c from the prior financial year.
Retail competition continued to intensify during the year, with the number of customers switching retailers increasing from an average of 20,000 per month in July 2009 to around 25,000 per month in July 2010.
Managing director David Baldwin said that Contact had largely maintained its customer numbers over the year, in spite of the increasing competition.
Sales to commercial and industrial customers rose by 7% over the year.
At its first half, Contact reported that construction of the company’s $100 million, 23 megawatt Tauhara 1 geothermal plant was on track, with commissioning expected around mid 2010.
Construction of Contact’s $250 million gas-fired peaking project also made good progress. The project is currently being commissioned and is expected to be fully operational late this year.
Looking ahead, Mr Baldwin said the 2010-11 financial year would be “a year of two halves”.
“Continuing high levels of take-or-pay gas and high hydro inflows will likely result in the first half being broadly similar to the first half of the 2010 financial year,” he said.
He said ebitdaf in the second half of 2010-11 is expected to benefit from increased operational flexibility as the Ahuroa gas storage and Stratford peaker plant are brought into commercial operation, and as take-or-pay gas levels reduce from January 2011.
Contact shares last traded at $5.80, down 2c. The stock has traded in a $5.60 to $6.50 range over the last year.
