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Modest TrustPower proves a quiet achiever

Friday 16th May 2003

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TrustPower doesn't fit anybody's definition of a glamour stock and it doesn't get much sharebroker or media coverage.

That's a shame because it's been a steady performer over the past three years after recovering from the last round of ham-fisted government meddling in its sector.

The Mount Maunganui-based company is a generator and retailer (or as some would have it a "gentailer") with 33 hydro-generation sites spread from the Bay of Plenty to Southland. It also has a wind farm in the Tararuas.

Following its announced withdrawal from Wellington and Christchurch it will have around 248,000 customers.

TrustPower is very "long retail," meaning its 6700 gigawatt hours (GWh) of sales aren't nearly matched by its 1800GWh of generation.

In the cold, dry winter of 2001 it was caught with its pants halfway down but didn't suffer the huge losses of NGC.

Since then new chief executive Keith Tempest has been putting in place a much more robust risk-management strategy, buying generation capacity such as the Cobb station near Nelson and hedging electricity purchases.

Much of its long position is also sold at spot prices to industrial customers.

The recent buyback of two out of every seven shares at $3.70 each has been well received by the market.

For the March full year due at the end of this month ABN Amro is forecasting a record $47.1 million net profit.

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