21 Feb 2013

Mighty River Power profit quadruples

7:19 pm on 21 February 2013

Mighty River Power's half year profit has quadrupled due to improved hydro volumes and increased market share of electricity customers.

The company, which is planned to be one of the first state-owned energy firms to be partially floated on the stock market, says it attracted more business customers as well as improving its margins.

The generator made a profit of $75.5 million in the six months to December, up from $17.6 million in the same period a year ago.

It will pay the Government a dividend of $67 million.

The chairman of a hapu laying claim to part of the Waikato riverbed said the Government should not be trying to partially privatise an asset that makes good money for the whole of New Zealand.

The Pouakani sub-tribe has asked the Supreme Court to rule it owns a stretch of the river that contains three hydro dams belonging to Mighty River Power.

Hapu chairman Tamati Cairns said if the hapu secured ownership of the dams any commercial arrangement with hydro generators would bring financial benefits to its people.

The Government plans to sell up to 49% of the state-owned hydro generator this year if a Supreme Court ruling on Maori claims to water in relation to the sale goes in its favour. The partial privatisation of Genesis Energy and Meridian Energy is to follow.

Price rises, costs fall

Electricity prices paid by Mighty River customers rose 2% over the period while costs fell 22%.

Improved operational performance drove underlying earnings, which were up 31% to $133 million.

Chief executive Doug Heffernan says the strong result is partly due to lifting its market share despite flat electricity demand.

"We've had a very strong operational performance compared to the prior year, so market share gains in customer sales and in our generation."

But the firm's investment in Geo Global Energy cost it $89 million due to delays in projects in Chile and Germany.

The company has cut a deal to take greater ownership of these projects, and Mr Heffernan says one of its first priorities is to create a strategic plan to turn them around.

He says this is important as domestic demand continues to be flat while demand in Chile, for example, is growing by 6% a year.

Mr Heffernan would not give any full year earnings guidance due to its impending stock market listing.