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Mighty River Power first-half profit rebounds as impairments fall

Tuesday 23rd February 2016

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Auckland-based electricity generator and retailer Mighty River Power announced a recovery in net profit for the six months to Dec. 31 to $74 million from $8 million in the same period last year, as impairments created by withdrawal from international operations fell.

The partially privatised company said its operating earnings were flat, falling just $1 million to $257 million on the basis of earnings before interest, tax depreciation, amortisation and changes in the value of financial instruments.

An increased interim dividend of 5.7 cents per share, up 2 percent, was declared, payable on March 31, although ebitdaf earnings guidance for the year was lowered and total dividend guidance remains unchanged for the full financial year at 14.3 cents.

Earnings guidance is affected by lower than average water levels in the company's main hydro catchment, the Waikato River, and chair Joan Withers warned that "hydrology could shift ebitdaf 10 percent, so based on many years of experience, the company expects guidance to move during the year, possibly several times, as part of business as usual."

Full year ebitdaf guidance is now placed at between $480 million and $500 million, down from a previous range of $490 million to $515 million, assuming average hydro inflows through to June 30.

While impairments on exits from international interests were the main cause of last year's much reduced net profit for the first half, there were still impairments of $18 million in the latest result, reflecting the permanent capping of exploratory geothermal wells in Chile and a $1 million writedown associated with the closure of Mighty River's gas-fired power station at Southdown, in Auckland.

"Pricing and competitive pressure remained intense during the period, in a market that is among the most competitive in the world," said chief executive Fraser Whineray in a statement to the NZX. "National electricity demand has continued to lift, up 1 percent, and the broader industry dynamic is positive with an improvement in ASX electricity futures prices."

The shares last traded at $2.65, and are down 2.7 percent so far this year.

BusinessDesk.co.nz



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