Genesis Energy has turned in a tidy-looking result for the six months to December 31, with net profit after tax up 85 per cent to $71 million as the company benefits from lower interest and depreciation costs, and low wholesale electricity purchase prices.
Lower priced electricity and weak consumer demand meant total revenue for the period fell 7 per cent to $1.03 billion, but total operating expenses fell more, down 9 per cent to $835 million.
That produced a 3 per cent improvement in the raw operating measure of earnings before interest, tax, depreciation, amortisation and changes in the value of financial instruments (ebitdaf).
Genesis will return to paying dividends this year after two years spent absorbing the cost of buying the Tekapo A and B hydro power stations as part of industry reforms. It will pay an interim dividend of $57 million.
Genesis is the last of the three state-owned power companies slated for partial privatisation and could yet beat its larger competitor, Meridian Energy, in offering up to 49 per cent of its stock to the public.
A crucial Supreme Court decision on the government's asset sales programme is due in the next three days and will determine whether Mighty River Power can go to market.
The combined impact of the various factors flowing in Genesis's favour in the latest half also saw net operating cash flow improve by 50 per cent to $218 million.
The company has no plans to build new generation plant in the near future and, like other electricity companies, sees wholesale prices remaining depressed for some time to come.
However, it's committing between $145 million and $155 million to upgrading the canal system at Tekapo over the next two years, which will involve two 14 week outages.
The company expects net profit after tax for the financial year ending June 30 2013 to exceed NPAT for the first half, although planned outages at Tekapo will affect generation capacity.