19 Feb 2013

Half year profit up 29% at Contact

6:44 pm on 19 February 2013

Shares in Contact Energy have risen 16 cents to $5.24 each after it announced a solid half-year profit following a reduction in costs and adjustments to asset values.

The listed energy company's profit rose 29% to $88 million for the six months to December 2012, up from $68 million for the same period the year before.

Stripping out one-off items, underlying earnings rose 21% to $92 million. Gross earnings were up 10% to $253 million.

Contact chief executive Dennis Barnes says the company benefited from full lakes, which meant it was able to run cheaper hydro generation instead of high cost gas-powered plants.

The company also took the opportunity of lower prices to purchase a greater proportion of its generation from the spot market.

Contact had been losing customers to its rivals but said that has now stabilised in both residential as well as commercial and industrial markets.

Given the flat energy demand outlook, Contact is restructuring the business and last week announced it was planning to cut more than 100 jobs.

The company will pay a dividend of 11 cents per share.