Sharechat Logo

Contact increases dividend as FY earnings rise in competitive market

Tuesday 20th August 2013

Text too small?

Contact Energy, the power company controlled by Origin Energy, increased annual profit before one-time items as it reduced reliance on contracted gas, allowing it to increase its dividend.

Earnings before interest, tax, depreciation, amortisation and changes in fair value instruments were $541 million in the year ended June 30, up 6 percent on the previous year, the Wellington-based company said in a statement.

Net profit of $199 million was slightly above First NZ Capital's expectation of $191.7 million.

"Contact's performance for the year has been characterised by the continued reduction in energy procurement costs and focus on retail operating performance in what remains an oversupplied and highly competitive market," chief executive Dennis Barnes said.

The company increased its final dividend by two cents a share to 14 cents a share to be paid on Sept. 16. It is paying out 92 percent of underlying earnings after tax. The total dividend for the year is 25 cents a share.

The company said investment in a flexible generation portfolio has reduced its reliance on large volumes of contracted gas.

It is driving on with a strategy of reducing energy procurement costs and says the completion of the Te Mihi power station will help.

"The investments in gas storage and flexible generation, coupled with the reduction in gas purchase obligations, have enabled Contact to better manage and respond to the inherent volatility of hydro generation output in New Zealand," Barnes said.

Commenting on the outlook, Barnes said the company will continue to progress in its transition from a focus on asset delivery to increasing value to customers.

Contact's revenue fell to $2.5 billion from $2.68 billion.

The shares gained 1.9 percent yesterday to $5.30., and have gained 1.9 percent in the past 12 months, lagging behind the NZX 50 Index's 11 percent gain. The stock is rated a 'buy' based on a Reuters survey.

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

UPDATE Contact increases dividend as FY earnings rise; quits wind projects
Contact shares drop to 2-month low, says 'hard to see' investment under Labour-Greens plan
Contact Energy, parent Origin mull redemption of $2.03 bln of notes after S and P change
Solid first half for Contact, despite retail margins squeeze
Contact sells mothballed New Plymouth power station for $24 mln
Contact Energy's King hints at greater returns as cash mounts
Contact energy beats FY profit forecast as revenue surges
Elliott leaving Contact for Origin role
Contact sees 2014 cash-flow boost as projects put on ice
Contact Energy unhappy with NZX 50 reweight relegation