Genesis Energy, gearing up for a partial share sale by the Government, has posted a big drop in both trading and bottom-line earnings, as its household customers use less electricity.
Genesis said yesterday it was a "challenging" half-year, after reporting that its interim trading profit fell 23 per cent to $150.5 million ended December.
Warmer winter weather than normal cut consumer demand for power, and above average hydro lake levels kept wholesale power prices low, leaving its revenues down 6 per cent.
Bottom-line net earnings were just $19.7m, off more than 70 per cent from the previous half-year, mainly because of the lower trading profit, but also a fall in the fair value of derivatives and higher depreciation. Genesis also incurred a one-off hit of nearly $20m after ending a supply contract for imported coal for its Huntly plant.
Genesis, the last of the big state- owned power companies to go on the sharemarket, is likely to be partly sold to investors in the first half of the year.
Analysts expect the shares to be sold cheaply, given the poor share performance of both Mighty River Power (MRP) and Meridian.
Since initially listing in May at $2.73, MRP shares have slumped to $1.99.
Meridian started at $1.08 in October and is down at $1.02.
Genesis spent $2.4m on the potential initial public offering during the half-year.
Announcing its half-year results yesterday, Genesis said its customers' household electricity use fell 5 per cent on the same period last year. Part of that reflected warmer winter weather, but it appeared people were becoming more aware of how much power they used and were using more energy-efficient appliances.
"I don't know if the 6 per cent is a long-term event," chief executive Albert Brantley said.
Genesis pointed out that total electricity sales rose 3 per cent in the half-year.
It sold more electricity to industrial and commercial customers, up 104 per cent.
The weather was warmer than usual in August and September, accounting for some of the drop in power use by households.
There was also a trend to using more efficient appliances , which may use half the power of older models. More homes were better insulated, also reducing demand, while more households were installing solar panels. There was also more awareness of power use, after price rises in recent years.
Genesis said it had experienced a sharp lift in the number of customers switching to other suppliers towards the end of the half-year, but that 3 percentage point rise only took it back to the industry average for switching.
Genesis bumped up its interim dividend to $64m to the Government, compared with $57m in the previous half-year. Fairfax NZ
- © Fairfax NZ News
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