Wet weather, intense retail competition and the late commissioning of new peaking plant contributed to the third year in a row of flat earnings for Contact Energy.
The country's largest listed energy company reported a statutory after tax profit of $150.3 million in the year ended June 30, down 2.8 per cent on the previous year's result, and exactly in line with predictions from brokers Forsyth Barr.
Contact is cutting its final dividend by two cents a share to 12 cents, leaving payout for the year at 23 cents, two cents lower than the previous year, but still representing a 100 per cent payout of underlying earnings, which were roughly the same as net profit, at $150.9 million. The dividend will be paid as a tax-free bonus issue, with capacity for buyback from shareholders by Contact.
The result was achieved on a 3.1 per cent increase in total revenue to $2.23 billion, to produce a 3.4 per cent improvement in earnings before interest, depreciation, tax, depreciation amortisation and changes in the fair value of financial instruments, of $441.42 million.
Chief executive Dennis Barnes is pointing to a stronger year in 2012, when the full benefit of investments in peaking plant at Stratford and gas storage at the nearby Ahuroa facility will be apparent.
While the Ahuroa facility allowed Contact not to renew a take or pay gas contract, and had stored the equivalent of $45 million of gas underground during the year, it had only one month's benefit from the Stratford peakers, which will allow Contact to meet demand peaks using fast-start plant rather than its combined cycle gas turbine plants, which are not designed for use as peakers.
"The availability of Ahuroa gas storage and the Strake peaker place Contact in an improved position to increase earnings, even if wet conditions were to continue to prevail in 2012," said Barnes in a statement to the NZX.
The company lost large numbers of retail customers during the year, but had increased its share of the industrial "time of use" market. It was concentrating now on construction of the new Te Mihi geothermal power station, which will augment and partially replace the aging Wairakei geothermal plant.
The shares were unchanged at $5.02 in trading on Friday, and have dropped 18 per cent this year.