Contact Energy's net profit for the year ended June was $127 million. Photo: RNZ / Nate McKinnon
Contact Energy's full year profit is down nearly a third on the last year, reflecting a drop in revenue.
The company said net profit was hit by an onerous contract expense of $84 million, driving down its net profit to $127m.
Key numbers for the year ended June compared with a year ago:
- Net profit $127m vs $182m
- Net profit excluding one-time expense $211m vs $182m
- Underlying earnings $573m vs $546m
- Final dividend 21 cents per share
[Ll] Revenue $2.19b vs $2.39b
[Ll] Operating cash flow $282m vs $330m
[Ll] Net interest expense $41m vs $36m
"Contact delivered a solid financial performance despite soft short-term wholesale market conditions," chief executive Mike Fuge said.
"We saw the highest nationwide hydro inflows in post-market history, with North Island rainfall the highest on record.
"This depressed spot market prices and saw greater price separation between the North and South Islands. We responded by purchasing excess renewable electricity from the wholesale spot market and reduced our thermal generation to the lowest in Contact history."
The company said the onerous contract expense followed a review of the estimated available capacity of the Ahuroa Gas Storage facility (AGS).
The bottom line was also dragged down by higher interest expenses and unfavourable movements in the fair value of financial instruments, which was partially offset by lower depreciation and amortisation and lower tax on earnings.
Operating free cash flow also dropped 15 percent with higher underlying operating earnings offset by higher stay-in-business capital expenditure, higher cash tax paid on strong earnings in prior periods and unfavourable working capital movements.
Contact's working capital remained elevated as the company held more gas and carbon units in inventory on lower thermal generation than the prior year.
Fuge said Contact's retail business continued to see growth through the past year.
"Multi-product customers are up 10 percent on FY22 driven by growth in our broadband business and supported by the introduction of fixed wireless broadband and expanded time-of-use offerings with the new Dream Charge EV plan.
"We've also been preparing to introduce Contact mobile, which will launch later this month."
Fuge said the coming year will see Contact reaching significant milestones in the delivery of its strategy to lead the decarbonisation of New Zealand over the next decade.
"We're preparing for Tauhara to come online by the end of the year, which will be a pivotal moment for the company.
"We're well on track to bring Te Huka 3 online by the end of 2024 and we'll be taking final investment decisions on GeoFuture, Kōwhai Park and a 100MW battery all within this financial year."