Contact Energy boosts 9-month net profit by 36 per cent

9.50am

Electricity retailer and generator, Contact Energy, today posted a net profit of $100.6 million for the nine months ended June 30, up 36 per cent on the same period last year.

Earnings per share also rose 36 per cent, from 12.86 cents per share (cps) to 17.45cps.

The company will pay a fully imputed special dividend of 10 cents on August 18.

The company said this special dividend was designed to ensure that Contact holds negligible imputation credits at the time of the expected change in majority ownership. Last week Edison Mission Energy agreed to sell its 51.2 per cent stake in Contact to Australia's Origin Energy for $1.67 billion.

Total operating revenue for the nine months rose 8 per cent, from $840.75 million to $907.74m.

On a quarterly basis, adjusted earnings, excluding one-off factors, for the three months to June 2004 were $41.7m, compared with $42.2m in the third quarter of last year.

The company said high inflows to hydro catchments were the main reason for this fall.

"The June 2004 quarter further demonstrates the benefits of integration between generation and retail operations during periods of marked electricity spot price volatility." said Contact's chief executive, Mr Steve Barrett.

In the latest quarter, wholesale electricity revenues were $131.0m, compared with $323.5m in the June 2003 quarter.

The company said the high wholesale revenues during the third quarter of last year reflected high spot prices during the early winter months last year, when low rainfall into hydro catchments coincided with uncertainty about the availability of thermal fuels.

"By comparison, the early months of winter 2004 were characterised by very high rainfall into hydro catchments, resulting in national hydro storage standing at 148 per cent of the historical average at the end of June -- the highest level ever recorded for that time of the year," Mr Barrett said.

He said the continued high water storage levels meant wholesale electricity prices were likely to remain below their average levels for the next few months.

In the longer term he said growing demand for electricity and uncertainty about future fuel and technology choices for new investment in generation meant that current total generation capacity was becoming increasingly constrained.

"In addition, we know that almost all choices for future generation will produce electricity at higher costs than in the past, putting upward pressure on electricity prices," Mr Barrett said.

Contact had just over 600,000 retail customers as at June 30, -- 508,000 electricity and 92,000 gas.

Shares in Contact Energy last traded yesterday at $6.00, having traded between $4.70 and $6.02 over the past 12 months.

- NZPA