16 Feb 2015

Contact Energy profit takes a hit

1:04 pm on 16 February 2015

Contact Energy's first-half net profit fell by more than half, reflecting lower margins, outages, one-off costs and changes in asset values.

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Photo: RNZ / Diego Opatowski

The electricity generator and retailer's net profit for the six months ended December was $51 million, down 54.5 percent compared to the same period last year.

The result was despite an 8 percent rise in sales to $1.24 billion.

Contact chief executive Dennis Barnes said the six months was a transitional period for the company as it integrated its new Te Mihi geothermal power plant and changed its retail billing system.

Mr Barnes said such change always created challenges but he was pleased the company managed to hold sales volumes amid continued intense competition and price discounting.

Nevertheless, retail profit margins fell while the company's bottom line also suffered from Te Mihi being offline, one-off costs and changes in asset values.

Mr Barnes said work on the Te Mihi station during the extended outage has improved its performance above expectations, which should reduce the company's cost of energy.

The company's shares fell more than 8 percent and were trading at $6.35 about midday.

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