Mighty River Power, the first of the state-owned power companies to be partially privatised last year, said 2015 earnings will be at the lower end of guidance, reflecting a lack of water in the catchment of the Waikato River, where it runs nine hydroelectric stations.

Chief financial officer William Meek told shareholders at the Auckland-based company's annual meeting that full-year earnings before interest, tax, depreciation and fair value changes would be within the range it gave in August of $495 million to $520 million, "with a bias to the lower end of the range due to the continuation of a long trend of drier than normal conditions in the Waikato catchment."

That compares with Ebitdaf of $504 million in 2014, when the company commissioned its new geothermal plant at Ngatamariki, cut operating costs by $30 million and avoided one-time expenditure it faced in 2013.

Chair Joan Withers said the guidance "reflects assumptions on additional hydro and geothermal production and continued pressure on retail electricity pricing."


"While we have a high degree of resilience in our business portfolio, there are some elements outside management control - such as hydrology and regulatory change - that could have a significant positive or negative impact on earnings," she said.

MightyRiverPower yesterday announced it will pay a special dividend of 5 cents a share, or $70 million as part of its ongoing capital management review.

The company's net debt stood at $1.03 billion at the end of the 2014 financial year, which was $174 million below the level projected in its prospectus. It has already returned about $50 million to shareholders via a buyback and repaid bank facilities by selling $300 million of 30-year bonds.

The company, which has an investment grade BBB+ credit rating with Standard & Poor's, is also mulling another buyback on market, of about $50 million, over the next 12 months.

"These capital management initiatives will ensure the company retains its investment grade credit rating and provides sufficient headroom and flexibility for growth when these opportunities arise," Meek said.

Shares of the power company rose 1.6 percent to $2.885 and have gained 33 percent this year.

The former state-owned enterprise stocks benefited from the National Party retaining the Treasury benches in the September general election, with opposition party plans to impose a central electricity buying agency introducing a level of risk to investors.

Read MRP's annual meeting presentation here: