Vector first-half profit down 2.8%

Friday 25th February 2011

Network company Vector's half year net profit dropped 2.8% to $98.5 million, as depreciation and interest costs rose.

Revenue for the six months to the end of December, lifted 1.4% from a year earlier to $629.3 million, while earnings before interest, tax, depreciation, and amortisation (ebitda) were up 2.5% to $317.7 million.

Vector Group chief executive Simon Mackenzie said that while electricity residential volumes were flat, business customers drove an increase in overall electricity volume, stemming a three year declining trend.

Gas distribution volume increased marginally and gas transmission volumes rose by 23.3% on a year earlier.

Depreciation increased due to a growing asset base, and first half borrowing costs rose by $8.4 million compared to a year earlier, including a one-off gain arising from the repurchase of floating rate notes. Tax was up $3.4 million.

Vector, 75% owned by a consumer trust, said an interim dividend of 6.75c per share would be paid.

Last week the company was named as a preferred bidder for the Government's ultrafast broadband initiative in Auckland, joining Telecom which was chosen earlier.

Vector's electricity sector reported a 3.6% rise in half year revenue to $296.4 million, with ebitda up $11.8 million to $195.3 million, and electricity volume up 1.8% from a year earlier.

"We've seen less activity in the multi-dwelling apartment market. In contrast new connections for small to medium business and industrial/commercial customers nearly doubled," Mackenzie said.

Gas transportation revenue lifted 8.8% to $111.5 million, with ebitda up $1.4 million to $87 million, with the 23.3% rise in gas transmission volume mostly due to a full six months of volume from the Kupe field.

In the gas wholesale sector revenue dropped to $199.3 million from $215.7 million a year earlier, with ebitda down $9.9 million to $31.7 million. Natural gas volumes were down 14.5%, reflecting continued strong competition in the industrial and commercial market and the expiry of a major contract in December 2009, Vector said.

Gas liquid sales improved by 14.4%, due to increased production levels at the Kapuni gas treatment plant, and improved LPG cylinder sales. Liquigas tolling volumes improved 32.6%, reflecting a full six months' trading from a new business model.

NZPA

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