Contact Energy sells Australian retail business

Contact Energy today announced the sale of its Victorian retail business Red Energy - just five months after the business was launched.

New South Wales-based Snowy Hydro Ltd has bought the business for an undisclosed sum.

Contact said in a statement Snowy Hydro would make a nominal up-front payment, with the balance to be paid over three years, subject to Red Energy achieving certain targets over the period.

Contact said it would write off its net investment in Red Energy and the sale was not expected to have a material impact on annual earnings.

Chief executive, Steve Barrett, said Contact had recently re-appraised its Australian investment strategy. Australia's Origin Energy became a majority shareholder in Contact in October.

"For a variety of reasons, including the recent change in majority shareholder and the emergence of new opportunities in New Zealand, we have determined that Contact's focus should be concentrated in the New Zealand market," Mr Barrett said.

He said this decision did not rule out future investment in Australia, but said Contact would not pursue a stand-alone integrated business model across the Tasman.

Red Energy was only launched as a start-up retailer in July. Mr Barrett said it had met or exceeded targets for its first five months of operations.

Shares in Contact Energy were up 2c at $6.22 this afternoon.

- NZPA