14 Feb 2022

Contact Energy posts significant increase in half-year profit

10:39 am on 14 February 2022

A lift in hydro generation, lower costs and higher sales has seen the country's largest power company significantly increase its half-year profit.

140814. Photo Contact Energy. Te Mihi power station

One of Contact Energy's power stations. Photo: Contact Energy

Contact Energy chief executive Mike Fuge said the company had delivered a "solid financial performance" during the half.

"We've seen double-digit growth in our operating earnings and profit off the back of a period of strong hydro generation (which was up by 6 percent on a year ago)," Fuge said.

The company secured long-term power agreements with major power users over the period, including Oji Fibre, Pan Pac, Genesis Energy and Foodstuffs.

"Long-term contracts underpin sustainable operations, support additional renewable generation development, and can also displace thermal


Contact's retail business also performed well over the half, adding 29,000 customers across its electricity and broadband offerings.

It said its project to investigate the world's first large-scale green hydrogen plant in Southland with Meridian Energy was also progressing well, with potential development partners shortlisted.

Last week, the majority owner of the Tiwai Point aluminium smelter, Rio Tinto, suggested it wanted to continue to operate the Bluff-based smelter beyond the end of its current price power contract in 2024 and help the country's electricity system manage dry year risk.

"It's early days, but we are encouraged that the smelter's owner recognises it needs to play a larger role to help manage dry year security of supply in New Zealand's electricity system," Fuge said.

However, some analysts have suggested that the green hydrogen plant could be shelved if the smelter continued to operate beyond 2024, as there would not be enough electricity to support both projects without new generation being built.

The company recently announced that the cost of its new geothermal plant in Taupō had blown out by $140 million to $818m and the timeline had been pushed out from mid-2023 to the second half of 2023.

It had also lodged consents with the Waikato Regional Council for a new, smaller geothermal power station near Taupō and had secured land access rights to build 600MW of wind projects across the country.

Fuge said the company was excited about the role its renewable generation was set to play in the decarbonisation of the country over the next decade.

Key numbers (Six months ended December 2021 vs six months ended December 2022)

  • Net Profit: $134m vs $78m
  • Revenue: $1.14b vs $1.14bn
  • Operating expenses: $817m vs $895m
  • Cash flow: $131m vs $157m
  • Dividend: 14 cents per share vs 14cps