KEY POINTS:
Contact Energy has reported a 15 per cent fall in annual net profit to $239.6 million, from $280.9 million, as wholesale electricity revenues slumped and gas prices rose.
The company said today that adjusted profit for the 12 months ended June 30 was down 4 per cent to $231.2 million, compared with $241.6 million for the same period in 2006.
The adjusted profit for the latest period excluded a $15.5m after tax gain in fair value of financial instruments and a $7.1m one-off tax charge resulting from the change in the corporate tax rate.
Contact is to pay a fully imputed final dividend of 17 cents per share, taking the total to 27cps for the full financial year -- an increase of 1cps from the 2006 financial year.
Earnings before net interest expense, income tax, depreciation, amortisation and financial instruments (ebitdaf) for the year at the energy generator and retailer was down 2 per cent to $543.7m.
Contact chief executive David Baldwin said the company had delivered a good result for the company's shareholders, despite average wholesale electricity prices being 42 per cent lower than in the 2006 year.
Meanwhile, during the 12 months to the end of June, the unit cost of natural gas increased 20 per cent.
"This trend of increasing costs for natural gas will continue until the company's entitlements to low-cost legacy Maui gas have been exhausted," he said.
While Contact had secured rights to an additional 170 petajoules of natural gas from the Maui field, significantly reduced flexibility in gas supply contracts remained a challenge for the business, Mr Baldwin said.
Total electricity generation for the year fell 4 per cent to 11,020 gigawatt hours (GWh), with a 19 per cent reduction in thermal generation as a result of increased hydro storage and higher inflows, Contact said.
Hydro generation rose 19 per cent, due to the higher inflows, while geothermal production rose 8 per cent as the company benefited from drilling activities at Wairakei and Ohaaki.
Retail electricity customer numbers decreased from 515,000 at June 30, 2006 to 513,000 for the 12 months to the end of June 2007, although customer numbers increased 2000 in the second six months.
Overall retail sales volumes increased 2.7 per cent relative to the prior corresponding period.
Retail gas customer numbers decreased from 79,000 at June 2006 to 75,000 at June 2007.
Mr Baldwin said Contact was making progress on plans to invest up to $2 billion in renewable electricity generation projects over the next five years.
"In July 2007, the company filed resource consent applications for its proposed 225 megawatt (MW) Te Mihi geothermal power station, which the company hopes will be called-in by the Minister for the Environment and considered under a streamlined resource consenting process," he said.
"We expect to file applications for the company's proposed Tauhara geothermal power station by mid-2008, which is expected to be of similar size to the Te Mihi power station."
Contact's goal was to have Te Mihi producing electricity in 2011 and Tauhara in 2012.
Geothermal energy was critical to providing significant volumes of reliable and renewable electricity, Mr Baldwin said.
It needed to be consented and developed quickly if New Zealand was to meet increasing electricity demand through clean, climate friendly power stations such as geothermal and wind.
Contact also expected to be able to provide an update on a significant wind project over the next month or two.
With the company's focus on developing renewables, decisions about the company's consented Otahuhu C base-load combined-cycle gas-fired power station would remain on hold.
"Contact is increasingly of the view that renewables could meet New Zealand's electricity demand growth in the medium term if supported by efficient consenting processes," Mr Baldwin said.
Contact Energy's shares closed at $9.44 yesterday, having risen from $6.72 a year ago and peaking and getting as high as $9.70 a month ago.
- NZPA
