Vector trims first-half profit, signals higher capital expenditure

Vector has reported its first-half result.

Auckland community-owned energy distributor Vector said its capital expenditure would pick up in the second half after reporting a slight fall in first-half earnings.

Vector, New Zealand’s largest distributor of electricity and gas with networks spanning the Auckland region, said its first half net profit dropped by 4% to $113 million.

The company set an interim dividend of 12.5c, up from 12c in the previous comparable period.

Vector plans about half a billion dollars in capex this financial year to June.

Chief executive Chris Blenkiron said the results were strong and in line with company expectations.

“This is a solid foundation as we continue to provide Aucklanders with energy today and in the future,” he said.

Adjusted earnings before interest, tax, depreciation and amortisation, for continuing operations, which did not include capital contributions, were $240m, up 19%. Revenue was up 14%.

“This puts the company in a sound position to continue to invest in growth, reliability and efficient electrification for Auckland,” he said.

Gross capital expenditure was $223m in the half, down 15%, but the company expects capex to be higher in the second half.

Capital contributions, which are paid by new customers joining the network, were $97m, down 22%.

Vector said its current approach to capital contributions aimed to ensure those driving growth paid the full cost, rather than other customers.

However, the Electricity Authority’s review into how new connections should be funded could impact this approach, the company said.

Vector’s majority shareholder is Entrust, with 75.1%.

Entrust, formerly the Auckland Energy Consumer Trust, represents the interests of 368,000 households and businesses in central, east and south Auckland.

Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.

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