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Trustpower lifts FY profit 35%, tips lower FY19 earnings after sale of Australian ops

Monday 14th May 2018

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Trustpower lifted annual profit 35 percent as the electricity generator-retailer's earnings were bolstered by favourable hydro generation, firm winter wholesale prices and its retail strategy.

Net profit rose to $129 million or 40.9 cents per share in the 12 months ended March 31, from $94 million or 29.6 cents a year earlier, the Tauranga-based company said in a statement.  

Including the discontinued Australian operations, earnings before interest, tax, depreciation, fair value movements of financial instruments, asset impairments and discount on acquisition were $267 million, in line with guidance. In January, Trustpower said ebitdaf would be between $255 million and $270 million in the year ending March 31.

Last December, Meridian Energy agreed to buy Trustpower's Australian hydro-electric generation assets for A$168 million. While the three generation schemes in New South Wales have performed well,  given their size and distance from New Zealand, the board considered that selling the Australian subsidiary was the best option for enhancing shareholder value, said Trustpower chair Paul Ridley-Smith.

Chief executive Vince Hawksworth said the company’s retail earnings of $60 million were a good indication the company has a strong underlying retail business, forming a solid platform for continued growth.

"Despite strong competition, our multi-product retail business strategy bundling life’s essential utilities including power, gas, internet and phone, continues to deliver results," he said.

Total utility account holders reached 397,000, a 3 percent increase from 385,000 at 31 March 2017. Gross margin increased to $151 million from $133 million in the previous year.

“This rise is well in excess of the increase in utility accounts, validating Trustpower’s view that the new category of bundled energy/telco is more profitable than either energy or telco alone,” said Hawksworth.

New Zealand generation production was up 11 percent at 2,235 GWh, which also helped boost earnings.

“While there is an element of good fortune in having strong hydrological inflows, the ability to capture that benefit requires a focus on long-term asset management and a dedicated team of experts operating the equipment throughout the country,” said Hawksworth.

Looking ahead, the company said its ebitdaf guidance for the current financial year is expected to be in the range of $205 million to $225 million, assuming average hydrology and climatic conditions. The guidance assumes a reduction in revenue of $27 million following the sale of the Australian operations and a reduction from the current year of approximately $25 million for a return to average hydrology and pricing.

The company declared a final dividend of 17 cents per share payable June 15, with a record date of June 1.  The total payout was 34 cents in the 2018 financial year. “Following the sale of our Australian operations we still anticipate sustaining this level of dividend in the immediate future," said Ridley-Smith. 

The stock opened up 0.2 percent at $5.86 and has eased 2.2 percent so far this year. 

(BusinessDesk)

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