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TrustPower first-half profit drops as SOEs grab customers

Thursday 4th November 2010

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TrustPower, the power company controlled by Infratil, posted a 28% drop in first-half profit and said earnings growth would stall in the full year as state-owned rivals increase efforts to win customers. 

Net profit fell to $59.7 million in the six months ended Sept 30, from $82.4 million a year earlier. The result includes one-time adjustments to tax and fair value of financial instruments.

Sales fell 1% to $403.5 million. The utility said the results were “satisfactory” given challenging market conditions, as inflows to hydro lakes helped drive down spot prices for electricity and SOEs vied for customers in the South Island. 

Competition for South Island customers has intensified because of the government-imposed asset swap among state-owned power companies that resulted in Genesis Energy and MightyRiverPower seeking southern customers to balance their load. 

“This acquisition activity was expected and is likely to continue in the near term,” TrustPower said in the statement. 

The utility sold 2,141 GWh of power in the first half, down from 2,207 GWh a year earlier. Total customers fell to 222,000 at Sept 30 from 225,000 March 31. 

Earnings before interest, tax, depreciation, amortisation and fair value movements on financial fell 5% to $147.7 million, which the company attributed to lower revenue from the Snowtown wind farm in South Australia due to low wind conditions, lower retail customer demand caused by a milder winterand lower South Island energy costs during winter 2009. 

TrustPower will pay an interim dividend of 19 cents per share, partially imputed to 13 cents per share, payable on Dec 10.

“While the first half market and climatic conditions were challenging, the company is currently expecting to achieve a full-year EBITDAF result in line with the 2010 financial year result,” it said.

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