Trustpower's first half profit increased as it produced more power at higher prices, and gained from a rise in the value of its electricity hedges.
Trustpower benefited from a 6 percent rise in generation from its hydro-stations, which it sold at higher prices. Photo:
Key numbers for six months ended September:
- Net profit after tax $115.1m vs $33.6m
- Underlying earnings $59m vs $52.7m (excludes moves in electricity hedges)
- Generation volumes 1,000 GWh vs 945 GWh
- Underlying earnings forecast $210m-$225m (excluding cost of selling retail business of about $9m)
- Interim dividend 17 cents a share
The Tauranga-based power company notched a solid gain in profit on higher generation and sales of its bundled services.
Trustpower benefited from a 6 percent rise in generation from its hydro-stations, which it sold at higher prices, lifting generation earnings 15.6 percent to $106.4m.
"Trustpower's nationwide geographically dispersed portfolio of flexible generation schemes were able to take advantage of weather events, contributing to increased operating earnings," chief executive David Prentice said.
The soon-to-be divested retail business, which includes gas, mobile, and broadband as well as electricity, had a dip in operating earnings to $15.8m from $18.3m.
"Our multi-product retail business strategy bundling life's essential utilities including power, gas, internet and phone has been a tremendous success delivering greater returns and longer customer tenure."
Trustpower has sold the retail business to Mercury Energy for $441m, and it needs only court approval of a restructuring of the Tauranga Electricty Consumers Trust to be completed.
After that Trustpower will rename itself Manawa Energy and be a renewable electricity supplier, although it has retained large commercial and industrial customers.
Trustpower chair Paul Ridley-Smith said the new company would focus on developing new renewable generation capacity to meet the anticipated significant increase in demand.
He said Trustpower was in the early stages of looking at two wind and two solar large-scale utility-scale generation projects, and ways to get them on stream by 2030 through partnerships, joint ventures, and acquisitions.
"With electricity demand set to grow by 50 to 70 per cent over the next 30 years from electrification of transport and industry the potential for Manawa Energy is huge and the business is well poised to take advantage of the opportunities the market presents," Ridley-Smith said.