Retail growth gives Contact a positive jolt

By Phil Boeyen, ShareChat Business News Editor

Thursday 2nd May 2002

Contact Energy (NZSE: CEN) has delivered a lower first half profit although on an adjusted basis the company is showing an improvement of more than 50%.

In the six months ended March the energy firm recorded sales of $442.6 million compared to $412.5 million last year and total revenue was $9 million higher at $453 million.

Net profit for the period was $30.05 million, down 16% on last year's $35.65 million. However last year's interim result included the proceeds from the sale of the final unit from the Whirinaki power station.

Contact says that after allowing for material, non-recurring items, its adjusted net profit for the period was $40.3 million compared with $26 million for the same period last year.

While gas and wholesale electricity revenues in the six months were lower than for the equivalent period the company says this was more than offset by strong growth in retail electricity sales.

"These totalled $265.8 million in the six months to the end of March, of which $4.8 million related to recoveries for sales made in prior periods," the company reports.

"After adjusting for this, retail electricity sales grew by 17% in the six months. Most of this increase is attributable to growth in sales volumes."

Contact's total electricity and gas retail customer base stood at almost 520,000 on March 31, up from 494,000 last September.

CEO Steve Barrett says he is very pleased with Contact's performance during the first half.

"Growth in customers reflects the success of several retail market strategies, including the loyalty based DualEnergy and Fly Buys programmes, and through subsidiary retailer Empower's growth.

"Growth from these sources is also characterised by relatively low customer acquisition costs, adding further to the strength of the retail performance."

Mr Barrett says in volume terms the company's average level of hedging has risen from around 60% last year to 75% at the end of March, with hedge prices now more accurately reflecting the volatility of the electricity market.

"We expect Contact to maintain an average level of hedge of around 75% through the balance of this financial year.

"However, the actual level for any moment in time may be different, with variation according to Contact's generation and retail and hedge levels for that particular period in time."

The company has reported slightly lower wholesale gas revenues of $65.5 million compared with $66.3 million last year, which it says is due to lower sales following the loss of some low margin, large volume customers.

Contact board plans to pay an interim dividend of 5.5 cents per share, the same as last year. It will be paid concurrently with the final dividend of 2.5 cents which was declared after the bid for Contact by Edison Mission Energy lapsed in February.

Comments from our readers

No comments yet