Infratil annual earnings pip past guidance as Tilt, Trustpower get late tailwind

Thursday 18th May 2017

Infratil beat annual earnings guidance after its recently demerged hydro and wind energy investments - Trustpower and Tilt Renewables - got a late tailwind from mother nature.

Underlying earnings before interest, tax, depreciation, amortisation and fair value movements in financial instruments rose 12 percent to $519.5 million in the 12 months ended March 31, beating Infratil's March guidance for ebitdaf of between $485 million and $505 million.

The boost came from bigger contributions than expected from Trustpower's Australian hydro assets and Tilt's Australian wind farms. Trustpower contributed $234.5 million to earnings and Tilt $131.7 million for a combined $366.2 million, up from $329.4 million before the companies were split up.

"The weather literally provided a late windfall for Tilt and Trustpower's generation," the company said in a statement. "Infratil had a positive year of operating performance and capital allocation and is well placed to provide good returns going forward."

Infratil downgraded its guidance for 2018, forecasting ebitdaf to be between $460 million and $500 million, which chief executive Marko Bogoievski and chairman Mark Tume said was due to the sale of its stake in Metlifecare and smaller contributions from NZ Bus and RetireAustralia.

The company spent $728 million in the 2017 financial year, of which $168 million was on capital expenditure and $560.1 million on new investments the biggest of which was Canberra Data Centres. Infratil had built up a war chest after selling out of Z Energy, Lumo and iSite Holdings. It forecast capex of between $200 million and $250 million in 2018.

Net profit dropped to $66 million, or 11.8 cents per share, from $438.3 million, or 78 cents, a year earlier when Infratil benefited from the sale of stakes in Z Energy and iSite Holdings.

The board declared a final dividend of 10 cents per share, paid on June 15 with a June 2 record date. That takes the annual return to 15.75 cents, up from 14.25 cents in 2016.

Among Infratil's investments, Wellington International Airport increased earnings 5.1 percent to $90.5 million as record passenger numbers lifted the transport hub's services, while NZ Bus, which recently missed out on a number of contracts in Wellington, increased earnings 4 percent to $43.7 million as it stripped out costs from its South Auckland service and benefited from a lower fuel price.

Perth Energy posted an ebitdaf-loss of $14.1 million, compared to positive earnings of $2.9 million. The unit struggled with the slowing Western Australia economy prompting Infratil to restructure the business with a smaller retail business, hedging to lower earnings volatility and a new wholesale supply agreement.

RetireAustralia boosted earnings 49 percent to $31.4 million with strong gains in unit prices, even as the resales fell due to a lack of available stock.

Newly acquired CDC generated earnings of $10.6 million for Infratil and is expected to generate low double-digit ebitdaf growth in 2018, while the ANU student accommodation contributed $7 million of earnings and US renewable energy investment Longroad Energy posted a $2.9 million ebitdaf-loss for Infratil.

The company also opened offers for two new infrastructure bonds for up to $150 million across both issues, including oversubscriptions. The five-year bond carries a coupon of 5.65 percent and an eight-year note pays annual interest of 6.15 percent.

The shares last traded at $2.99 and have gained 8.7 percent so far this year.

(BusinessDesk)

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