21 Feb 2014

Vector feels sting of having to cut charges

12:25 pm on 21 February 2014

The country's largest electricity and gas distributor, Vector, has reported an 11.4 percent fall in half-year profits due to more expensive gas and price reductions required by the Commerce Commission.

The company reported a net profit of $104.6 million in the six months to the end of December, compared with $118 million for the same period in 2012.

The commission forced Vector to slash its gas distribution charges by 18 percent and transmission charges to larger users by 30 percent. The company also had to reduce its electricity charges by 10 percent last year.

It says the regulatory changes and the end of its entitlements to Kapuni gas at legacy prices weighed on its financial results. A fall in production at the Kapuni field during the period also had an impact.

Sales fell by 1.7 percent to nearly $658 million.

However, Vector says it is well-placed in the long-term, given that its assets are in the strong-growing Auckland region.

It has lifted its first-half dividend by a quarter of a cent, to 7.5c a share.