Meridian Energy's underlying profit has fallen sharply as low lake levels hit generation, and earnings from Tiwai Point aluminium smelter - its biggest customer - fell.
Meridan Energy Wellington. Photo: RNZ / Alexander Robertson
The company reported $428 million full year net profit after tax, which reflected the gains made from hedging contracts taken out to insure against price volatility.
Meridian chief executive Neal Barclay said the company experienced some challenges.
"Drought conditions during the second half of the financial year dampened our cash earnings by reducing generation and increasing hedge costs, but that is just part and parcel of being a hydro generation company in New Zealand."
Drought had reduced hydro generation by 12 percent on the previous year, and inflows into Meridian's South island hydro catchments from November 2020 to April 2021 were the third lowest on record during that period.
The company's retail sales growth remained strong, with New Zealand volumes up 14 percent.
Barclay also said the price negotiated with the owners of Tiwai Point Aluminium Smelter to extend operations to 2024 reduced during the second half of the year.
"Whilst both events were significant and impacted financial performance, the underlying drivers of future business value remained strong, in particular growth in customer sales and our commitment to build the Harapaki wind farm," he said.
Meridian chief executive Neal Barclay Photo: Supplied
Meridian said it was also making good progress in the South Island on alternative uses for the power once the smelter closes.
"We are working on a number of opportunities that have the potential to not only enhance the value of our business, but also create lasting long-term value for New Zealand," Barclay said.