Transpower New Zealand, owner and operator of the national power grid, will pay its first dividend in seven years even as profits fell 4 per cent in midst of a grid upgrade.

Post-tax earnings before net changes in the fair value of financial instruments and debt fell four per cent to $77.1 million for the six months ended December 31, the company said in a statement. Sales increased 5 per cent to $379 million.

The Wellington-based state-owned monopoly will pay an interim dividend of $110 million to the Crown in March, its first payment since the 2004/05 financial year, said chairman Mark Verbiest.

"During that time, the operating surplus has been reinvested into our significant capital programme," Verbiest said.


Transpower's capital spending jumped $422 million on the half a year earlier, with the company investing heavily in grid upgrades after an extended period of under-investment over the last twenty years.

"We are seeking to extract greater and more cost effective capacity from our existing grid, and where possible, minimise the need to build new lines," Verbiest said. "There is still a need to upgrade and maintain existing assets, replace outdated equipment, and put in place new technology platforms to operate the power system."

In November, Transpower offered of up to $200 million of unsecured, unsubordinated bonds as it looks to raise $3 billion of debt over the next five years. The bonds are being offered with terms to maturity of four years (floating rate notes) and seven years (fixed rate notes), at the company's discretion.

Transpower will publish detailed accounts when its half year results are tabled in Parliament next month.