Vector lifts half-year profit

JASON KRUPP
Last updated 10:09 21/02/2013
VCT 2.830 -0.02 -0.70%
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Vector has posted a 10.8 per cent rise in first-half net profits on the back of tight cost controls, legacy gas pricing and a solid performance from the technology unit, but warned of earnings headwinds ahead.

The Auckland electricity and gas distribution monopoly reported a net profit of $118 million for the six months ending December 31, up from 106.5m in the same period a year ago.

A dividend of 7.25 cents per share was declared, up 3.6 per cent compared to a year ago.

Chairman Michael Stiassny said that while the firm's financial health was tied to the overall health of the economy, which remained soft, efforts to optimise Vector's portfolio continued to drive earnings growth.

The firm reported revenues of $638m in the period, up 5 per cent on a year ago, partly due to regulated price increases, as well as Transpower transmission charges, which were passed through to customers.

On a volume basis, the warm summer saw the amount of electricity distributed to customers fall 0.9 per cent to 4321 gigawatts, while gas volumes fell 9.5 per cent to 58.8 petajoules.

That was offset by cost containment across Vector's infrastructure networks and ongoing growth in the firm's smart metering and telecommunication business, with earning before interest, tax, depreciation and amortisation up 3.9 per cent $336.3m

However, the firm warned of headwinds in the second half of the financial year as the Commerce Commission's mandatory electricity price reduction comes into effect on April 1.

The firm said earnings are also likely to be impacted by the ongoing economic weakness in the Auckland region (outside of the construction sector), and the tail-off of legacy pricing at Kapuni Gas.

Still, Stiassny said growth from the technology division and wholesale gas operations should see Ebitda in the second half of the year come in on par with the previous year.

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- BusinessDay.co.nz

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