Vector posts indifferent half-year result

Power company Vector expects to beat prospectus forecasts with a full year profit in the range of $38 to $43 million, despite reporting an 11 per cent fall in first half profit.

Vector, the country's biggest electricity and gas distributor, today posted a net profit after tax (npat) of $38.4m for the six months to December 31, compared with $43.3m in the same period a year earlier.

Chairman Michael Stiassny said the result was not directly comparable with the same period a year ago as it included both an earnings contribution, and one-off costs, of moving to full ownership of power company NGC in August last year.

Taking out borrowing costs and amortisation of goodwill relating to the NGC purchase, the first half profit actually rose 33 per cent to $86m.

Mr Stiassny described the result as "extremely satisfactory".

"Our net earnings have already exceeded our IPO (initial public offer) prospectus npat forecast of $36.5m for the full year."

The company has now widened its full year target to $38m-$43m, Mr Stiassny said.

Vector's business is seasonal, with the company generating most of its revenue in the first half.

Mr Stiassny said Vector met all of its first half operating targets, despite tough trading conditions and an unseasonably warm winter which reduced p ower and gas sales.

Total operating revenue climbed to $569m from $346m, while earnings before interest, tax, depreciation and amortisation rose by 47 per cent to $303m.

Shares in Vector, 75 per cent owned by an Auckland consumer trust after a public float of a quarter of the company in August last year, traded down 3c at $2.70 on the result.

The shares have ranged between $2.58 and $3.37 in the past six months, against an initial public offer price of $2.38.

Vector announced an interim dividend of 6 cents per share, to be paid on April 7.

Vector chief executive Mark Franklin said the full acquisition of NGC was already providing the company with significant benefits.

"It has considerably strengthened our cash flows, with operating cash flows for the period amounting to $218.9m compared with $151.9m in the previous half year."

Mr Franklin also hinted that it gave Vector the scope to "pursue new business opportunities".

"We look forward to capitalising on this further."

He said the integration of Vector and NGC was progressing well, and was expected to be completed by the end of the financial year.

- NZPA