Trustpower lifted annual profit 35 per cent as the electricity generator-retailer's earnings were bolstered by favourable hydro generation, firm winter wholesale prices and its retail strategy.
Net profit rose to $129 million or 40.9c per share in the 12 months ended March 31, from $94m or 29.6c a year earlier, the Tauranga-based company said.
Including the discontinued Australian operations, earnings before interest, tax, depreciation, fair value movements of financial instruments, asset impairments and discount on acquisition were $267m, in line with guidance. In January, Trustpower said ebitdaf would be between $255m and $270m in the year ending March 31.
Last December, Meridian Energy agreed to buy Trustpower's Australian hydro-electric generation assets for A$168m ($182.5m) million. While the three generation schemes in New South Wales have performed well, given their size and distance from New Zealand, the board considered that selling the Australian subsidiary was the best option for enhancing shareholder value, said Trustpower chair Paul Ridley-Smith.
Chief executive Vince Hawksworth said the company's retail earnings of $60m were a good indication the company has a strong underlying retail business, forming a solid platform for continued growth.
"Despite strong competition, our multi-product retail business strategy bundling life's essential utilities including power, gas, internet and phone, continues to deliver results," he said.
Total utility account holders reached 397,000, a 3 per cent increase from 385,000 at 31 March 2017. Gross margin increased to $151m from $133m in the previous year.
"This rise is well in excess of the increase in utility accounts, validating Trustpower's view that the new category of bundled energy/telco is more profitable than either energy or telco alone," said Hawksworth.
New Zealand generation production was up 11 per cent at 2,235 GWh, which also helped boost earnings.
"While there is an element of good fortune in having strong hydrological inflows, the ability to capture that benefit requires a focus on long-term asset management and a dedicated team of experts operating the equipment throughout the country," said Hawksworth.
Looking ahead, the company said its ebitdaf guidance for the current financial year is expected to be in the range of $205m to $225m, assuming average hydrology and climatic conditions. The guidance assumes a reduction in revenue of $27m following the sale of the Australian operations and a reduction from the current year of approximately $25m for a return to average hydrology and pricing.
The company declared a final dividend of 17c per share payable June 15, with a record date of June 1. The total payout was 34c in the 2018 financial year.
"Following the sale of our Australian operations we still anticipate sustaining this level of dividend in the immediate future," said Ridley-Smith.