The operating profit was a 6% improvement on the $257million reported in the previous corresponding period. The reported profit of $113million was a 53% increase and the normalised profit was up 6% to $84million. Revenue was down 3% to $772million.
Mercury, formerly known as Mighty River Power, is majority owned by the Government. A 5.8c-per-share interim dividend will be paid, up from 5.7c in the pcp.
The Crown owns 716million shares and it will get $41.5million in dividends.Mr Foster said the energy margin, which was the best indication of operational performance, was only up $4million and was $6million lower than Forsyth Barr forecasts.
"While hydro generation provided a strong tailwind, that had been offset by falling electricity prices in the commercial and industrial market, in particular."
Boosting performance was a $5million gain on the sale of excess carbon credits — included within other income — and lower-than-expected maintenance costs.
Those two factors were the main reason Mercury outperformed Forsyth Barr’s operating profit forecast, he said.Mercury chief executive Fraser Whineray said the 2015 closure of the gas-fired Southdown station substantially reduced future carbon obligations and the company divested some of its carbon credits in the period.
Capital expenditure was expected to be $115million in the full year as a result of Mercury’s focus on hydro reinvestment and geothermal drilling.
The capital expenditure programme, focused around Whakamaru and Aratiatia hydro stations, would further improve the efficiency and long-term reliability of operations on the Waikato River and sustain performance of geothermal production, he said.
The company was also lobbying for the Government to shift from the current renewable electricity target to focusing on total renewable energy.
"An energy target would force us as a country to give much greater weight to the opportunity to use renewable heat in industrial applications and to electrify transport."
Among other things, Mercury said the regulatory environment must be simplified. In particular, distribution pricing needed to be overhauled as a priority to provide appropriate long-term signals for consumers and generators alike and to keep pace with new technologies.
Mercury had revised its operating profit guidance for the financial year to $500million, subject to any material adverse events, significant one-off expenses or other unforeseeable circumstances. Mercury shares were unchanged at $3.02 and have gained 19% in the past 12 months.
