28 Aug 2015

Mighty River sees huge drop in profits

6:58 pm on 28 August 2015

Mighty River Power's full-year profit has tumbled 78 percent to $47 million, although strong cash flows means it is increasing its full-year dividend payout by half.

This profit plunge is due to massive writeoffs in its international investments and lower hydro generation.

The company's operating earnings have also fallen 4 percent to $482 million in the year to June.

It is now considering raising its residential power prices after a three-year price freeze.

Mighty River's chief executive Fraser Whineray said competition in the retail market was extreme.

He said the company, which owns the Mercury and Glo-Bug brands, may not be able to continue to absorb rising costs and several factors would have to be considered when it decided its pricing strategy this year.

The energy generator's profit stood at $47 million in the same period, mostly hit by $165 million of non-cash writedowns on international geothermal investments and its Southdown plant.

The electricity generator said the slide in profits was mostly due a $83 million writedown on its geothermal investments overseas and lower hydro-generation, due to lower than average Waikato catchment flows.

The company will still pay out an increased dividend of 14 cents per share, as well as a special 5 cent dividend to be paid in December.

Mighty River chief executive Fraser Whineray

Mighty River chief executive Fraser Whineray Photo: RNZ/Nona Pelletier

Mr Whineray said hydro-storage levels had recovered, and said he expected underlying earnings to rise to between $490 and $515 million in the current year.

He said Mighty River would pay a full dividend of 21.5 cents a share.

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