Wellington-based power company Contact Energy has ruled out any more new investment in power projects for now, after posting a half year profit of $88 million, up more than 29 per cent on the same period last year.
Operating earnings for the six months to December were $253 million, up 9.5 per cent, almost exactly in line with analysts' forecasts.
The company will pay a dividend of 11 cents a share on March 26.
It was revealed last week that Contact plans to cut 10 per cent of its 1100 staff, as part of a $40m cost cutting programme. The cost cutting comes as the power company finishes a $2 billion development programme, and with the flat outlook for energy demand.
"In the current low demand growth environment we will not be committing to further generation developments in the near term," Contact said.
The company said the half year profit was "solid" despite weakness in the wholesale electricity market and sustained competition in the retail market.
Chief executive Dennis Barnes said Contact's results showed the benefits of its diverse fuel and asset portfolio and competitive customer offers.
Higher rainfall in the South Island meant more hydro generation replaced more expensive thermal generation. Contact was able to cut its thermal generation and buy more power from the spot market while prices were lower.
"I am pleased to see the way we have been able to flex the portfolio over the past six months to deliver good results in both wet and dry conditions," Barnes said.
Earnings before net interest expense, tax, depreciation, amortisation, change in fair value of financial instruments and other significant items (EBITDAF) were $253m, up 10 per cent from $231 million in the first half of the 2012 financial year.
Underlying earnings after tax (profit for the period adjusted for significant items that do not reflect the ongoing performance of the group) were $92m, up $16m (21 per cent).
Contact said its Te Mihi geothermal project had made good progress and, combined with the expiry of the Huntly "swaption" contract, would make a significant contribution to earnings from the middle of 2013. Te Mihi, near Taupo, is in the first stages of commissioning.
The completion of Te Mihi this year would complete Contact's more than $2b investment programme, adding lower-cost geothermal, and flexible thermal generation capacity and New Zealand's first gas storage facility.
Contact said it retained a stable market share for households, commercial and industrial customers, despite more than 30,000 customers a month were switching between all companies.
But Contact said margins "are lower with continued generation oversupply and the competition that this drives. We will continue our focus on winning and keeping customers.
"With our current capital investment programme coming to an end and the flat outlook for energy demand we are taking steps to adjust the cost base and structure of the business," Barnes said.