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MetService more than doubles 2013 annual profit after renewing key contracts, cutting costs

Monday 21st October 2013

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Meteorological Service of New Zealand, the nation's state-owned weather forecaster, more than doubled annual profit in 2013 as it reduced costs and renewed key contracts in a challenging market.

Profit rose to $2.7 million in the year ended June 30, from $1.1 million the year earlier, the Wellington-based company said in its annual report presented to parliament today. Sales edged up 0.2 percent to $42.3 million while expenses declined 5.2 percent to $37.7 million.

In the 2013 financial year, MetService marked its 20th year as a state-owned enterprise. It claims the title of the world's most commercially focused state weather company, providing weather information to global news services such as the BBC, devising a simple traffic-light system to let road maintenance crew know when to paint road markings and developing an iPad app to give pilots the latest weather updates as they prepare for take-off in the cockpit.

The latest year "has been a challenging year for many of the economies in which we do business," MetService chairwoman Sarah Smith and chief executive Peter Lennox wrote in the latest annual report. "International sales were impacted by these economic conditions, the strong New Zealand dollar and the timing of key contracts in the European market."

Despite contraction of new business opportunities in several markets, strong relationships and an understanding of customer needs led to the renewal of major contracts with Meridian Energy, BBC, TV5 Philippines, The Radio Network, Air New Zealand and Qantas Airways.

The company's website has increased in popularity over the year, following a relaunch in December, with average daily visits up 28 percent, ranking it as one of the nation's most popular sites.

The MetService is New Zealand's oldest scientific institution, with a history dating back to the early years of British colonial rule in 1861 when an extension of the electric telegraph system enabled it to collect daily weather reports from far flung settlements.

A spate of shipwrecks prompted the government to start a storm-warning service as part of the marine department in 1874, when an average 25 vessels were totally wrecked each year along the coastline.

The MetService has been shuttled between seven government departments in its history, and has even come under the control of the Air Force. Unlike its overseas counterparts such as the US-based National Oceanic and Atmospheric Administration which is a non-profit government department, the MetService moved to a commercial focus on July 1, 1992.

The company, which has paid out $472 million in dividends since becoming an SOE, hasn't yet decided on a final dividend to the Crown for the latest year. In 2013, it paid a $506,000 dividend, or 10 cents a share, for the 2012 year. That was down from a $625,000 dividend, or 12.5 cents a share, the year earlier.

Since its June 30 balance date, MetService in August bought a 49 percent stake oceanic consultancy MetOcean Solutions, giving it a foothold in a market worth more than $10 million. The $3 million purchase was funded by bank borrowing. In 2013, MetService reduced its borrowings by $2 million to $15 million.

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