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Current as of 26/12/14 07:40PM NZST

Grant Bradley

Aviation, tourism and energy writer for the Business Herald

Mighty River profit up 84pc

Cost savings and production from geothermal power stations bring final dividend slightly above expectations

Mighty River chief executive Doug Heffernan and chairwoman Joan Withers beat the dividend forecast in the prospectus. Picture / Greg Bowker
Mighty River chief executive Doug Heffernan and chairwoman Joan Withers beat the dividend forecast in the prospectus. Picture / Greg Bowker

Cost savings have helped Mighty River Power boost profit by 84 per cent and pay a dividend slightly above expectations.

The former state-owned enterprise's 103,000 shareholders will be paid a 13.5c-a-share dividend at the end of September.

The company increased its final dividend by 0.5c a share to 8.3c, bringing total distributions for the year to 13.5c a share, 4 per cent above prospectus forecast and 13 per cent ahead of last year's total dividend.

That represents a payout ratio at 72 per cent of free cash flow and 98 per cent of net adjusted profit, and is in line with the company's policy to pay dividends at a rate of between 90 per cent and 110 per cent of net adjusted profit.

Of the stake not held by the Government, the average holding is 6560 shares, meaning those shareholders will get a full-year dividend of about $885.

The company yesterday reported a full-year profit of $212 million, up from $115 million last year when it was hit by the cost of taking direct control of its investment in international geothermal operations.

MRP said it achieved a $20 million permanent reduction in operating expenditure, after retiming of maintenance and helped by the conclusion of major power station building work.

It suffered from the worst hydrological conditions in its Waikato hydro catchment but said earnings were boosted by production from its geothermal power stations - which make up about 42 per cent of MRP's generation. It was able to reduce sales to commercial and industrial customers when wholesale electricity prices had been low.

Operating earnings (ebitdaf) grew 29 per cent to $504 million.

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After stripping out the impact of significant impairments from taking direct control of international geothermal investments in Chile and the United States, underlying earnings were up 3 per cent or $5 million.

Chairwoman Joan Withers said generation from low cash cost renewables provided the foundation for delivering above the IPO forecasts.

Chief executive Doug Heffernan said the company's differentiated retail electricity brands performed well as competition continued to intensify across all residential and business segments.

The company expected earnings in the 2015 financial year to be in the range of $495 million to $520 million - subject to any adverse events, significant one-off expenses or other unforeseeable circumstances.

Shares listed at $2.50 last year and yesterday closed down 0.5c at $2.37c.

Dividend dates
Ex-dividend September 1: Investors must own or have bought shares before the ex-dividend date.
Record date September 3: Investors who own shares as at the ex-dividend date will appear on MRP register.
Payment date September 30: All eligible shareholders will be paid their final dividend by cheque or into their bank account.

See Mighty River's latest financial results presentation here:

- NZ Herald

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