Mighty River Power produced a good result on all levels in
the year ended June, including declaring a dividend 0.5c
higher than forecast, Craigs Investment Partners broker Chris
Timms said yesterday.
On Monday, another of the Government-controlled energy
companies, Meridian Energy, also announced a larger dividend
than previously forecast.
''Despite a materially negative second half, Mighty River
ticks all the boxes for a good result.''
Operating earnings of $504 million beat the prospectus
forecast by $6 million. The profit was driven by $30 million
of cost reductions.
Only $20 million of those were permanent. In the previous
corresponding period, operating earnings were $390 million.
Sales revenue was down 7% at 1.67 billion.
Reported profit of $185 million beat the latest guidance,
which was $175 million to $185 million.
The dividend of 13.5c per share was higher than the forecast
and if fully tax paid, equated to 98% of the reported profit.
''Capital management initiatives could lead to positive
dividend payout changes or special or aggressive buybacks. An
announcement will be made at the annual meeting,'' he said.
Among the negatives in the report were slightly higher
capital expenditure for the 2015 financial year than Craigs
had factored in for later years.
It was $145 million, including $50 million for the smart
Mighty River chief executive Doug Heffernan said the year was
marked by highly competitive customer pricing and the worst
inflows into the Waikato River hydro catchment in the
Mighty River's average energy price for both business and
residential customers was flat in the past year, in line with
its listing forecast, he said.
Chairwoman Joan Withers said the improved performance meant
the board could declare a final dividend of 8.3cps, taking
the total to 13.5cps.
Labour energy spokesman David Shearer took issue with the
size of Mighty River's after-tax profit, which rose by 84% to
$212 million from the $115 million in the previous period.
Mr Shearer said the profit was ''simply outrageous'' when
demand for electricity was flat or declining.
However, the accounts show in the previous period Mighty
River had a write-down of $85 million for impaired assets,
compared with nothing in the year ended June 2014 - boosting
the reported profit.
Mr Shearer also failed to acknowledge the 31% reduction in
operating costs gained by Mighty River.
Normalised earnings, which companies use to strip out unusual
items, were $195 million for 2014 and $180 million for the