Lakes fall and so do profits

By PAUL PANCKHURST

Meridian Energy's profits dived sharply in the second half of the financial year and the company blames the wholesale price spikes of last autumn's power shortage.

The state-owned power generator yesterday revealed a net profit after tax - excluding one-offs - of $26.3 million for the six months to June 30, down from $83 million for the previous six months.

The bottomline profit for the year was $111.9 million - up 10 per cent on the previous year.

However, this year's result was boosted by one-off gains of only $2.6 million against the previous year's $17.1 million.

Chairman Francis Small said the below-budget second half was because of price spikes on the spot electricity market caused by low inflows into hydro lakes and a shortage of thermal fuel.

Looking wider, Meridian's annual report shows the company lagging behind industry standards - and its own target - for return on equity.

That issue was accentuated by a review late in the financial year that saw assets revalued upwards by $600 million.

The target return on equity for the year was 8.9 per cent.

Excluding the revaluation, the actual return was 6.5 per cent.

Included, it was 5.5 per cent.

Meridian used the profit announcement as a platform to complain about the drawn-out nature of the process for securing consents for the Project Aqua hydro development.

It was "deeply concerned" that delays would put the project at risk.

After balance date, the company paid a $17.4 million final dividend to the Government, taking the total for the year to $71 million.

That compares with $54.6 million for the previous year.

The dividend is 65 per cent of the company's after-tax profit.