22 Aug 2011

Contact Energy's profit falls slightly

6:45 pm on 22 August 2011

Contact Energy has reported a fall in annual profit due to full hydro lakes pushing down wholesale electricity prices, and intense competition for customers.

New Zealand's largest electricity generator and retailer made $150 million in the year to the end of June, almost 3% less than the previous year.

When one-off items are stripped out, underlying profit rose slightly to $151 million.

Contact has been losing customers to its rivals in the wake of Government changes to promote competition.

Demand has been restrained because of a mild winter, the Christchurch earthquakes and subdued economic activity. The company says wetter weather also resulted in lower wholesale prices.

Revenue rose 3% during the year to $2.2 billion due to higher electricity prices and volumes.

Contact Chief Executive Dennis Barnes says the company benefited from $420 million of investment in the second half of the year in the Ahuroa gas storage facility and Stratford peaker plant, meaning it could reduce generation and hence costs.

Contact is pointing to a stronger year this year, with the Ahuroa and Stratford facilities helping to drive earnings, even if the wet weather continues.

Contact, which is 53% owned by Australia's Origin Energy, will pay a final dividend of 12 cents a share, taking the full year distribution to 23 cents - two cents less than the previous year.

Shares in Contact Energy rose 14 cents to end the trading day at $5.15.