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TrustPower FY earnings fall 6 percent on dwindling customers, thinner margins; shares gain

Friday 10th May 2013

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TrustPower, the utility controlled by Infratil, reported a 6 percent fall in underlying annual earnings as it went faced a tougher environment with dwindling customer numbers and thinner margins. The shares gained.

Underlying earnings, which strips out one-off impairment charges and changes in the fair value of assets, fell to $127.3 million, or 40.5 cents per share, in the 12 months ended March 31, from $135.3 million, or 43 cents, a year earlier, the Tauranga-based company said in a statement. Net profit fell 6.3 percent to $123.4 million, or 39.2 cents per share.

Revenue slipped 0.2 percent to $805.5 million, with electricity sales creeping up to $731.5 million and electricity lease revenue flat at $33.7 million. The generator-retailer shed 3,000 electricity customers in the year, ending it with 206,000.

"The group operating performance was considered satisfactory given lower New Zealand generation production and a challenging retail environment, where pressure on margins and lower customer demand was experienced," the company said.

The board declared a final dividend of 20 cents per share, with a May 30 record date, and payable on June 14. That takes the total payout to 40 cents, in line with 2012.

The shares rose 1.3 percent to $7.55 in trading today.

TrustPower took a dig at the Opposition political parties' plans to introduce a central buying agency, saying government's "do not have good track records of efficient allocation of investment capital or risk management through the electricity supply chain" and that the current market framework has been working for the past two decades.

"New Zealand can ill afford dramatic regulatory and policy interventions that cast aside the framework on which investors have made long term investment decisions," the company said. "The consequent impact on private property values will surely deter continued domestic and foreign investment in New Zealand's future infrastructure."

TrustPower reported a fall in total customer sales to 3,683 gigawatt hour from 3,960 GWh a year earlier. The average spot price of electricity purchased rose to $86 per megawatt hour from $78/MWh.

New Zealand generation fell to 2,330 GWh from 2,582 GWh, of which hydro fell to 1,692 GWh from 1,934 GWh and wind generation fell to 638 GWh from 648 GWh. The average spot price of electricity generated rose to $83/MWh from $72/MWh.

Australian wind generation from the Snowtown Wind Farm in South Australia rose to 386 GWh from 376 GWh. TrustPower is progressing with the second stage of the Snowtown development, which is part of a long-term supply arrangement with Contact Energy's majority shareholder, Origin Energy of Australia.

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