26 Feb 2019

Strong electricty demand drives Vector's profit up

11:42 am on 26 February 2019

The country's biggest electricity lines company's net profit has bounced back with strong electricity volumes driving growth across its business units.

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Vector's net profit for the six months ended December rose to $82.6m, up 5.5 percent on the year before. Photo: 123rf.com

Auckland-based Vector's net profit for the six months ended December rose 5.5 percent to $82.6 million, compared with $78.3m the year before.

Revenue rose 1.8 percent to $688.6m, because of continued growth in Auckland and a colder winter than the year before.

Regulated business earnings were up more than 3 percent, largely due to higher electricity volumes.

Gas earnings were up 12.5 percent with higher production levels at the Kapuni gas treatment plant and cost improvements from its new bottle swap plant in South Auckland.

Earnings in the technology segment grew nearly 13 percent, with continued growth in smart meter deployments in New Zealand and Australia.

However, it said the E-Co Group, one of its technology businesses, had experienced some market and operational challenges and underperformed against expectations.

"To address this, a new CEO and a new management team have been recruited, who have been repositioning the business to meet the growing demand for heating, ventilation and air-conditioning solutions," Vector said in a statement.

The company said it will be reviewing its dividend policy, once the Commerce Commission makes a decision on the reset of regulated pricing and quality standards from April next year.

"Vector's future earnings and ability to pay ongoing increasing dividends could be significantly influenced by the reset of our electricity network revenues for the period 1 April 2020 to 31 March 2025, which is known as default price path," it said.