Mercury's third-quarter operating statistics demonstrate the company continues to turn water into cash, Forsyth Barr broker Damian Foster says.
The electricity generator-retailer, formerly known as Mighty River Power, increased annual earnings guidance 2% as unseasonably strong inflows in the Waikato catchment lifted the power company's hydro generation.
Mercury expected earnings before interest, tax, depreciation, amortisation and fair value adjustments to be $510million in the 12 months ending June 30, up from $493million a year earlier.
Mr Foster said the $10million increase in guidance was Mercury's second upgrade. The generator-retailer raised its annual forecast when it posted its first-half result in February, due to increased hydro generation.
''The April rain means we will be lifting our hydro generation forecast a further 170GWh.''
Total sales were up 3% versus the previous corresponding period - 1.6% mass market and 4.2% commercial and industrial. Mass market was up due to customer growth. On a per-customer basis, sales continued to slip, Mr Foster said.
Contact Energy's March profitability continued to hold, Craigs Investment Partners broker Chris Timms said.
Energy earnings were up $1.5million on the previous corresponding period (pcp) to $40.6million.
The final quarter was expected to be down on the pcp as low South Island dam levels affected the fourth quarter.
However, Craigs' current full-year earnings forecast of $530million implied the final quarter being down $9.4million down on its pcp - a potential small upgrade on the forecast, Mr Timms said.
In contrast to the North Island, South Island volumes had been subdued by a drier climate. Storage was now at just 89% of its long-run average for April.
Due to this, hydro generation fell by 29% year-on-year and the company ran more thermal generation to cover its load.''
Moving into the final quarter, a continuation of current trends was expected, he said.
