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Waikato's big dry may hit Mighty River profit

TIM HUNTER
Last updated 07:53 22/02/2013

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Near-drought conditions in Waikato this summer could put the brakes on Mighty River Power's full-year profit after a wet winter boosted its interim result.

The state-owned electricity company yesterday posted net profit of $76 million for the six months to December, up from $18m a year earlier.

However, last year's bottom line was affected by a large accounting adjustment for interest-rate derivatives, so the company paid close attention to underlying earnings that stripped out those distortions, chairwoman Joan Withers said.

Underlying earnings for the six months were $133m, up from $102m for the same period a year ago and $89m the year before that. Revenue for the half year fell 3 per cent to $706.3m.

Its operating performance benefited from higher hydro generation because of above- average inflows to its Waikato catchment in the three months to September.

Mighty River generates most of its electricity from eight hydro stations on the Waikato River.

In the latest half year it produced 2468 gigawatt-hours from hydro, up 210GWh on the same time last year.

But yesterday, chief executive Doug Heffernan said summer conditions were a big turnaround on the first quarter.

The region was now nearing a drought situation, he said. "Since December 31 inflows into the catchment have been significantly lower than average and storage is currently at 217GWh compared to 359GWh this time last year."

The current figure represents 58 per cent of average historical storage levels.

‘Mighty River is due to offer shares to the public in the next few months in the first of the Government's big SOE sales.

Yesterday's announcement included results from Mighty River's US$250m investment in overseas geothermal projects through the GGE fund, which the company described as "mixed".

Mighty River announced an interim dividend to the Government of $67m. The payout was down from the $75m paid out last year, due to a change in dividend policy.

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- © Fairfax NZ News

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