26 Feb 2014

Mighty River Power lifts profit

7:16 pm on 26 February 2014

The first company to be partially sold by the Government, Mighty River Power, has lifted net profit 63.8 percent, reflecting one-off gains and cost cutting.

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Mighty River Power hydro scheme. Photo: MIGHTY RIVER POWER

Despite its worst-ever hydro conditions, the electricity generator and retailer's net profit rose to $123.7 million for the six months to December from $75.5 million in the same period a year earlier.

The company also cut costs by nearly $33.7 million, which included $8.3 million a year of permanent cost savings.

Chairperson Joan Withers said the company was on track to meet its full-year prospectus forecast for operating profit, despite it having a quarter less hydro than in the previous half-year.

She said the latest six months were particularly challenging but its newly completed Ngatamariki geothermal station helped offset the fall in hydro production by lifting its production by 25 percent.

The company also managed the impact of the poor hydro by cutting the number of low-margin business customers and by concentrating its hydro production into those times when prices were highest, she said.

Ms Withers said that, as forecast at last November's annual shareholders' meeting, net profit should be more than $35 million ahead of the prospectus prediction.

Mighty River will pay a first-half dividend of 5.2 cents per share, a little over $38 million of which will go to the Government as its major shareholder.

About 53 percent of the power company is owned by the Government following last year's the partial sale.

Mighty River more conciliatory to Labour and Greens' electricity policies

Mighty River Power is taking a much more conciliatory attitude towards the Labour and Greens' electricity policies than most of the rest of its industry.

Meridian chief executive Mark Binns, for example, said earlier this month the Labour/Green policies would be risky for taxpayers, would provide a disincentive to developing more renewable power and could mean the loss of New Zealand's expertise in renewable energy.

But Mighty River chief executive Doug Heffernan said his company was taking more of a wait and see approach and it would wrong to expect a lot of detail around what the Labour/Green policy might be.