Horizon Energy cuts earnings guidance

Last updated 10:13 11/02/2013

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Horizon Energy Distribution has cut it earnings forecast by 21 per cent due to higher costs of transmission, regulatory prices changes, and expenses relating to its acquisition of Aquaheat.

The Whakatane-based lines company said it expects net profit for the year to March 31 to come in at $3.4 million, down from a previous forecast of $4.3m, and a net profit of $6.4m earned in the previous year.

Chairman Rob Tait laid the blame for the revision on higher transmission costs as well as provisions needed to meet the Commerce Commission's price reductions.

In addition, the company said its balance sheet would wear operating losses from subsidiary Aquaheat, as well as the remaining costs from the acquisition.

The earnings revision could potentially widen as Horizon Energy said the currency forecast did not include the financial impact the collapse of Mainzeal Property and Construction would have on Aquaheat.

The subsidiary is active in the commercial and industrial building sector, specialising in hot water systems.

Tait said the exact exposure to Mainzeal couldn't be quantified yet but further advice would be given to the market once it was available.

The firm also said the forecast could be impacted by any mark-to-market changes in the value of it interest rate swap portfolio from February 1 to March 31.

Horizon Energy shares, which trade infrequently, closed at $3.40 on Friday, a level that's broadly held for much of the past 12-months. 

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- BusinessDay.co.nz

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