Vector profits up 16pc, revenue dips in recession

Vector chairman Michael Stiassny (L) and chief executive Simon Mackenze. Photo / Brett Phibbs

Electricity and gas distributor Vector reported a 16.3 per cent rise in full year net profit from continuing operations to $164.9 million.

Revenue from continuing operations dropped to $1.17 billion from $1.18 billion, while earnings before interest, taxation, depreciation and amortisation (ebitda) from continuing operations rose 6.3 per cent to $582.2m.

Bottom line net profit rose 125 per cent to $370.5m.

The result included the one-off gains from the sale of the company's Wellington lines business last year.

Group chief executive Simon Mackenzie said the recession had an impact on the business.

Growth in new connections had slowed and volumes were down on last year.

Efficiency programmes, started nearly two years ago, delivered full year gross savings of $20m and Vector had significantly improved its debt profile and maintained its ratings with international credit agencies, said Mackenzie.

Shareholders will be paid a fully imputed dividend of 13.75c per share for the year, compared to 13.25cps for the prior period.

Vector said it continued to invest in its assets - electricity, gas and fibre networks, gas processing, and smart meters - spending $319m on growth capital, replacement capital, and maintenance works during the year.

"The way forward will be challenging given the regulatory reset, gas market dynamics and legacy contract roll-offs, coupled with the soft economic conditions," Mackenzie said.

"We will, however, continue to pursue growth options such as fibre and smart meters."

Electricity consumption decreased by 0.3 per cent, and growth in connections fell by 18.3 per cent. The gas market over the past year had been volatile, with wholesale and retail gas volumes contracting. Growth in retail gas connections was down 44 per cent.

Vector's fibre optic infrastructure business achieved a number of milestones during the year Mr Mackenzie said.

These included the near completion of the building of the network for major customer Vodafone, ahead of time and on budget,

Vector was strongly placed to be part of the country's fibre initiative. It was ready to deliver in Auckland, and potentially beyond, he said.

Vector had been instrumental in setting up the New Zealand Regional Fibre Group working collaboratively with other fibre and lines companies.

"If we get the opportunity and if it makes commercial sense, we'll be part of New Zealand's fibre solution," said Mackenzie.

"In the future, fibre will be the means for many retailers - not just the telcos - to deliver services to customers and drive New Zealand's economic development and productivity,"

- NZPA