Trustpower first-half profit, ex-Tilt, falls 7.6pc on increased operating expenses, demerger costs

Trustpower spun out its Australian windfarms into a separately listed company, Tilt Renewables, on October 31.

Trustpower, which spun out its Australian windfarms into a separately listed company, Tilt Renewables, on October 31, posted a 7.6 per cent decline in first-half profit on a demerged basis, in the face of rising operating expenses and costs related to the split.

Profit was $45 million in the six months ended September 30, from $48.7m a year earlier, the Tauranga-based company said in a statement. Revenue climbed to $501.6m from $474.8m.

The demerger created a separate company in Tilt that was valued at about $657m, based on the value of its shares on the NZX and ASX, which were distributed to existing shareholders. Based on figured adjusted for the split, Trustpower's operating expenses rose to $392m from $354m a year earlier, driven by increases in line costs, generation production costs, wages and 'other expenses'. Earnings included $8.7m of demerger expenses and one-time costs associated with the closure of the company's Energy Direct brand, it said today.

"Margins have been maintained in challenging market conditions, and underlying earnings have remained stable," said chairman Paul Ridley-Smith. "Management has also ensured the company was well prepared for the demerger; a highly important strategic initiative which was implemented just a few days ago."

Trustpower shares were unchanged at $4.79. The company declared an interim dividend of 16 cents a share, payable on December 9, from 21 cents a year earlier when the company included its Australian windfarms.

The company's retail business, which sells electricity, gas, broadband and telephony services to households and businesses in New Zealand, posted first-half revenue of $465m from a restated $449m a year earlier. the gains were driven by increased a 1.5 per cent gain in electricity revenue to $414m and a 48 per cent jump in telco revenue to $31m. Gas sales fell to $16.8m from $17.8m.

Its generation business in New Zealand, which amounts to 634 megawatts of hydro and wind generation assets, along with metering and irrigation assets, and energy trading, reported sales in the first half of $149m, up from a restated $139m as electricity revenue climbed to $134m from $127m, making up for a drop in meter rental revenue to $8.5m from $9.4m.

The company also has a controlling 65 percent interest in King Country Energy, which it acquired in March, which has 54MW of hydro generation. King Country contributed earnings before interest, tax, depreciation, amortisation and financial adjustments of $7.1m in the first half, with sales of 113 GWh to its 17,000 retail customers.

Its Australian generation assets, made up of 477MW of hydro and wind generation, reported revenue of $77.7m from a restated $64.8m a year earlier. Expenses rose to $20.7m from $17.6m, while ebitdaf jumped about 21 per cent to $57m.

The average spot price for generation in New Zealand was $55/MWh, from $54/MWh a year earlier.