Sharechat Logo

FIRST TAKE: Meridian Energy reports flat earnings for FY17, explores Europe for Powershop

Thursday 24th August 2017

Text too small?

Meridian Energy reported flat earnings for the year to June 30, reflecting a strong first-half performance offset by dry conditions in the South Island that limited its ability to generate electricity from its southern hydro dams.

Net profit after tax was $197 million, up from $185 million the year before, but on its preferred measure of earnings before interest, tax, depreciation, amortisation and changes in the value of financial instruments (ebitdaf), earnings were just 5 percent up on the previous year at $653 million.

Delivering his last financial results before retiring later this year, chief executive Mark Binns described them as “another good financial result”.

A final dividend of 8.7 cents per share, 88 percent imputed, brings total ordinary dividends for the year to 14.03 cents per share, a 4 percent increase on the previous year and represents 84 percent of free cashflow.

Consistent with the previous year, Meridian will also pay an unimputed special dividend of 2.44 cents per share under its capital management programme, bringing to $312.5 million the total special dividends paid since the capital management programme began in August 2015.

The result was achieved on total revenues of $2.319 billion, from $2.375 billion the previous year and total expenses of $1.666 billion, compared with $1.725 billion.

Binns warned of a “slow start” to the 2017/18 financial year, with the company continuing to generate less from its hydro assets and buying more electricity under arrangements with other generators, although hydro lakes are beginning to recover after the driest February to June in 84 years in Meridian’s main catchments.

“Inflows in August 2017 have been above average so far,” say notes for Binns’s presentation to investors later today. “July 2017 saw New Zealand sales volumes up 14 percent across all segments and ICP (customer/meter)  numbers up 1.2 percent.

The current financial year would show the impact of a full year of new, higher pricing for the Tiwai Point aluminium smelter, Meridian’s single largest customer.

The systems behind the company’s online retail electricity offering, Powershop, had been successfully launched before Christmas last year in the UK and the company was now contemplating roll-outs in continental Europe.

To achieve this, it has split the Powershop front end from the software system that drives it and constituted that business as a new entity, dubbed Flux Federation.

In Australia, where Meridian has wind farms and more than 100,000 Powershop customers for the first time, the policy environment was “volatile and uncertain”.

“Higher wholesale and retail prices may elevate smaller retailer risk positions,” the company said, with lower customer growth “a possible result”.

Ebitdaf from Australian operations improved by $5 million to $34 million.

For the first time this year, Meridian is also using an integrated reporting framework aligned to the Global Reporting Initiative’s Sustainability Reporting Guidelines. 


  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:

MARKET CLOSE: Blue-chip stocks Meridian, A2 lead market lower
NZ dollar rises on Brexit hopes, rate cut reassessment
Three not failing, just needs a new owner - MediaWorks CEO
Major investors back new CBL class action targeting directors
Rip Curl purchase a done deal on Kathmandu proxies alone
Comvita chair Neil Craig eyes the exit once he finds a new CEO
Mercury raises guidance on increased storage, high spot prices
Eroad reports strong 3Q sales growth, eyes ASX listing
MediaWorks puts TV business on the block
NZ dollar benefits as preliminary Brexit deal improves risk appetite

IRG See IRG research reports