Business

Mighty River forecasts significant growth in coming year

07:05 am on 29 August 2013

Mighty River Power is forecasting significant growth in the year ahead, mainly driven by its new geothermal power station near Taupo.

The company, which is 51% Government-owned, expects operating earnings to rise by 26% in line with its prospectus forecasts.

On Wednesday, it reported a two-thirds jump in net profit to $115 million, while underlying earnings, rose $17 million to $180 million.

The profit lift was achieved despite the impact of the drought on hydro generation.

Chief executive Doug Heffernan said the completion of the Ngatamariki geothermal power station will drive profits higher.

He said geothermal is currently just over 30% of Mighty River's total production but with Ngatamariki that will increase to around 40%.

Mr Heffernan said geothermal will become almost as big as hydro to Mighty River's business.

He said geothermal is seen as a valuable renewable power source because it has a high level of reliability it's not weather-dependant.

Despite the growing economy, Mr Heffernan said he does not believe demand for electricity will grow until more houses are built.

Chair Joan Withers said she's disappointed with the share price which has fallen by as much as 13% since it listed with an issue price of $2.50.

She said the best way to change negative sentiment is to drive the sorts of results that have just been delivered.