23 Aug 2016

Mercury's profit tops expectations

2:28 pm on 23 August 2016

Mercury, formerly known as Mighty River Power, has reported a strong full year net profit, ahead of market expectations, reflecting an $11 million rise in operating earnings.

Mighty River Power's Whakamaru power station on the Waikato River.

Mercury's Whakamaru power station on the Waikato River. Photo: MIGHTY RIVER POWER

The power company made a net profit of $160m in the 12 months ended in June, compared with $47m the year earlier, which included large writedowns on international geothermal investments and its Southdown plant.

The company's underlying operating profit was up 2.3 percent from the year earlier to $493m, and was expected to decline slightly to $490m in the current year ending in 2017.

Revenue fell seven percent to $1.56 billion, reflecting a four percent fall in average energy prices.

The full year dividend was in line with guidance at 14.3 cents a share, in addition to a special dividend of four cents a share.

Chair Joan Withers said special dividends reflected the proceeds from non-core land sales and Mercury's current limited requirement for growth capital.

The company expected to pay a dividend of 14.6 cents per share in the current year.

Chief executive Fraser Whineray said the new Mercury brand had been well received by customers.

"We have a stable and well-functioning regulatory environment that is delivering high levels of energy security, unprecedented choice for customers and a renewable electricity supply that is 80 percent and rising. This is an extremely positive context, creating opportunities for us around advancing technology and renewable energy with the right regulatory conditions," he said.

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