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Trustpower says annual earnings in middle of range, downbeat on 2020

Wednesday 10th April 2019

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Trustpower says annual earnings were around the middle of its previous guidance and it anticipates a weaker 2020 with generation levels likely to be lower than normal. 

Earnings before interest, tax, depreciation, amortisation and fair value adjustments were $220-226 million in the year ended March 31, falling in the middle of its October guidance for ebitdaf to be $215-235 million. That's down from the $243 million reported last year. 

The Tauranga-based electricity generator-retailer also expects earnings to fall in the 2020 financial year, projecting ebitdaf of $205-225 million in the year ending March 31, 2020. Generation is likely to be below the long-run average, the company said, and it anticipates fewer retail customers. 

Trustpower's total generation was 338 gigawatt hours in the March quarter, down 21 percent from the same period a year earlier, although the average spot price was almost twice as high at $163 per megawatt hour. High generation in the third quarter depleted the company's lake levels, and light rainfall didn't replenish storage, it said. 

Total generation for the year was 1,994 GWh, down from 2,235 GWh in the March 2018 year, with the average price at $125/MWh, up from $88/MWh a year earlier. 

The company expects 2020 generation of about 1,870 GWh, below the long-run average of 1,917 GWh due to low lake levels. However it expects wholesale prices to stay in line with current forward pricing,m and temperatures and retail consumption to be in line with historical norms. 

Trustpower ended the quarter with 402,000 utility connections, up from 397,000 a year earlier. Of that, electricity connections were down 6,000 at 267,000, telecommunications lines rose 9,000 to 96,000, and gas connections increased 2,000 to 39,000.

About 107,000 of its customers have two or more connections with Trustpower, up from 100,000 a year earlier. Bundling has been a key element of Trustpower's retail marketing campaign, and about 82 percent of new customers took on multiple products in the March quarter. 

Trustpower is more downbeat about its retail customer outlook for 2020, basing its lower earnings guidance on average mass market customer numbers of 230,000-240,000, including about 103,000 telecommunications customers. Its October 2019 guidance was based on customer numbers of 255,000-260,000, with 95,000 telecommunications customers. 

The utilities company increased staff numbers to 818 full-time equivalents from 803 in 2018, and 786 in 2017. 

The shares last traded at $7.15, and have gained 16 percent so far this year. 


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