Contact Energy profit surge
Wellington-based power company Contact Energy has reported 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 finished a large development programme, and because of the flat outlook for energy demand.
Contact 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 the results showed the benefits of its diverse fuel and asset portfolio and competitive customer offers.
Earnings Before Net Interest Expense, Tax, Depreciation, Amortisation, Change in Fair Value of Financial Instruments and Other Significant Items (EBITDAF) were $253 million, 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 $92 million, up $16 million (21 per cent).
Contact said its Te Mihi geothermal project 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.
Contact said it retained a stable market share for households, commercial and industrial customers, despite more than 30,000 customers a month switching between all power companies.
But Contact said margins "are lower with continued generation oversupply and the competition that this drives".
It added: "We will continue our focus on winning and keeping customers."
The Dominion Post