Meridian posts record earnings amid negotiations with Rio Tinto over Tiwai

Tiwai Smelter is Meridian Energy's largest customer. Picture supplied

MeridianHalfYr

Meridian Energy has reported record full-year earnings, boosted by favourable hydro generation from its South Island dams and a 39 per cent uplift in corporate sales.

The country's biggest electricity generator said net profit rose 26 per cent to a record $191 million in the six months to December 31. Underlying net profit, which excludes fair-value adjustments and one-off costs, rose to $184 million from $144 million.

Earnings before interest, tax, depreciation and changes in financial instruments climbed 20 per cent to $465m.

The company announced an unchanged interim dividend of 5.70c per share and a special dividend of 2.44c per share.

In announcing the result Meridian said it has been in regular dialog with Rio Tinto since it announced a strategic review of the Tiwai aluminium smelter – Meridian's largest customer.

The review is to consider all options, including curtailment and closure of the smelter and is expected to update the market on intentions by the end of the first quarter 2020.

Meridian said it has offered contract changes to Rio for 622MW and 450MW of electricity.
"significant future transmission cost savings for the smelter are possible," Meridian said.

Ebitdaf from the New Zealand wholesale business rose 20 per cent to $393 million on the back of higher average electricity prices and a 10 percent lift in hydro and wind generation volumes.

Earnings from the New Zealand retail arm jumped 32 per cent to $49 million, boosted by a strong increase in sales to corporate customers.

In Australia, where the firm operates the Powershop brand and a clutch of smaller wind and hydro assets, earnings fell 5 per cent to $39 million. Reduced generation volumes offset steady retail customer growth.

Other earnings, which include the firm's Flux Federation technology arm and the Powershop platform in the UK, rose to $16 million, from a $10 million loss the year before.