TrustPower operating profit up at $274.4m

Electricity retailer and generator TrustPower yesterday reported a slightly improved operating profit for the year ended March, with the only minor surprise being a 1c-per-share bigger dividend.

Earnings before interest, tax, depreciation, amortisation and fair movement of financial instruments and asset impairments was $274.4 million for the period, compared with $273.9 million for the previous corresponding period (pcp).

The reported profit was down nearly 6% to $112.4 million but last year's accounts were helped by a $12 million gain on financial instruments.

Operating revenue rose 1% to $766.2 million. Operating cashflow was $224 million and shareholders' funds were $1.42 billion. Customers numbers fell by 4000 in the period to 221,000.

Chairman Bruce Harker said for most of the financial year wholesale electricity prices remained subdued because of above average levels of South Island hydro storage.

However, some short-term wholesale price increases occurred during the last four months of the financial year, when thermal generation was priced at very high levels after capacity constraints in the market.

"TrustPower's sound risk-management practices resulted in the company not being materially affected by these events," Dr Harker said.

Forsyth Barr broker Peter Young said there were no real surprises in the result.

"The only significant variance to our forecast was the tax number. TrustPower had quite high non-assessable revenue and a significant amount of overprovided-for income tax."

The 1c per share increased dividend was a minor surprise but, as expected, the final dividend of 20c per share was only partially imputed to 16c per share. The total dividend for the year was 39c.

Trustpower's discussion of future plans contained nothing new, he said.

"We don't foresee any significant changes to our forecasts or valuation coming out of this result."

Forsyth Barr retained its current recommendation of "buy" for TrustPower and valued the company at $8.33 a share, Mr Young said.

Dr Harker said in a statement to the NZX TrustPower had recognised the potential for the Coleridge hydro scheme to play an important part in delivering reliable irrigation capacity along the Rakaia River plains in Canterbury.

TrustPower expected electricity prices would become more volatile over time and, consequently, generation capacity which was able to meet peak demand would become more valuable, he said.

Many of the company's hydro-generation assets had peaking capacity and a detailed review had been undertaken to identify potential improvement opportunities that could increase peaking capacity in the short to medium term.

New Zealand hydro storage was at above average levels for this time of the year and TrustPower's hydro-storage lakes were in a similar position, Dr Harker said.

 

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