13 Feb 2014

Genesis tries to hold onto customers

6:53 am on 13 February 2014

Genesis says it will cut prices and offer new products to try to stem the loss of customers to rivals aggressively pushing for a bigger market share.

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Photo: Supplied

The state-owned electricity retailer and generator's first-half net profit has plummeted 72 percent to $19.7 million for the six months to December.

That's down from $70.8 million in the same six months a year earlier.

Revenues fell 6 percent as competition intensified from new, smaller players in the market, while demand for electricity dropped.

Chief executive Albert Brantley says the company is working on ways to cut the high rate of customers switching companies, which could include price, service or products.

He says there is a lot of media debate and discussion within the industry about whether lower wholesale prices will continue long-term.

Mr Brantley says there could be short-term suppression of prices because of the high temperatures over the last couple of years and significant rainfall events over the last six months.

Or he says there could be a gradual return to more normal levels of wholesale prices as demand increases, which would put more pressure on some of the smaller retailers which are taking advantage of the lower wholesale prices.

The profit was also hit by asset revaluations and depreciation, as well as one-off costs of $20 million for exiting a coal supply contract and $2.4 million for preparing the company for listing on the stockmarket.

Albert Brantley says he can't give any forecast because of the impending listing.

Genesis will pay the Government a $64 million dividend, 13 percent more than it paid the previous year, because it has more cash in hand.