Power company Contact Energy has reported a fall in profit on lower operating earnings and higher depreciation, partially offset by lower interest costs.
Key numbers for the 12 months ended June compared to a year ago:
- Net profit $182m vs $187m
- Operating earnings $537m vs $553m
- Final dividend 21 cents per share
[Ll] Revenue $2.39b vs $2.57b
[Ll] Depreciation and amortisation $262m vs $249m
[Ll] Net interest expense $36m vs $50m
Operating earnings fell 3 percent on lower wholesale electricity prices, lower sales and rising gas and carbon unit costs, which were partially offset by more renewable generation.
Chief executive Mike Fuge said the company delivered a "solid" performance despite the volatile trading conditions.
"This unpredictability has been compounded by a combination of global energy supply and security concerns, exacerbated by the impact of Russia's invasion of Ukraine, with subsequent unprecedented increases in international energy prices, including coal, which has also coincided with a reduction in gas output from the domestic gas market," he said.
Fuge said demand for renewable electricity remained strong, with the company securing long-term power purchase agreements to supply Oji Fibre, Pan Pac, Genesis Energy and Foodstuffs with renewable electricity.
"Long-term contracts underpin sustainable operations, support additional renewable generation development, and can also displace thermal generation.
"We are seeing further exciting demand growth potential with more proposed process heat conversion projects in industry and high-quality data centre proposals now in the public arena."
Contact also said Rio Tinto was looking to keep running its low-carbon aluminium smelter at Tiwai Point beyond 2024 and had started looking at options with electricity generators.
Contact said it has been approached by Rio and the company would "constructively engage".
"It's still early days, but we are encouraged that the smelter's owner recognises the renewable advantages of our electricity system and Contact supports their engagement approach with key local stakeholders," Fuge said.
Contact said the southern green hydrogen project was also "progressing well".
In the results announcement, Contact also said it would build a 51.4 megawatt geothermal power station adjacent to its existing Te Huka power station near Taupō.
The station, named Te Huka Unit 3, followed the company's announcement last year it would build a geothermal power station on the Tauhara field, also near Taupō.
Contact said the combined investment would increase the company's renewable electricity generation by 25 percent, and increase New Zealand's total renewable supply by more than 5 percent on average per year.
The company's retail business continued to grow over 2022, with total connections increasing by 51,000.
Looking ahead to 2023, Fuge said the company was committed to "leading the decarbonisation" of the country.
Contact is forecasting operating earnings of $550 million in 2023 and $720m by 2025.
