Meridian Energy cuts interim dividend

HAMISH RUTHERFORD
Last updated 09:51 27/04/2012

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Wellington-based company Meridian Energy has cut its interim dividend by more than a quarter, blaming the impact of low rainfall on its South Island hydro lakes.

New Zealand's largest electricity generator, which derives most of its generation from hydro schemes in the lower South Island, said it would pay $71.3 million to the government for the six months to December 31.

For the same period last year Meridian paid an interim dividend of $94.2m, while a month later it paid a special dividend of $520m, part of the proceeds from selling the Tekapo hydro canals to Genesis Energy, a deal forced by the government.

''Low hydro inflows to Meridian's South Island catchments impacted the company's operating performance,'' Meridian said in a statement.

In February Meridian reported an underlying net profit after tax of $98.9m for the six months to December 31, a 20 per cent fall on the same period a year earlier. The company had earlier warned that low South Island hydro storage meant it could miss full year financial performance targets.

Chief executive Mark Binns said the result was sound.

''We're continuing our strong record of shareholder returns while ensuring we have sufficient capacity to fund our future growth plans.''

Yesterday Finance Minister Bill English said part of the reason that the government's finances had deteriorated further in recent months was a weaker outlook for profits from state owned energy companies.

''There's an assumption that the SOEs are some sort of guaranteed cash cow, but in fact they're not,'' English told Radio New Zealand this morning.

''Electricity demand is down, electricity company profits are down.''

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- The Dominion Post

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