Mighty River lifts earnings outlook on strong first half

Mighty River's Nga Awa Purua geothermal power station. Photo /The Daily Post

State-owned electricity company Mighty River Power is lifting its pre-tax earnings forecast by up to 7.5 per cent as it sees the benefits of $1 billion invested in new geothermal power stations.

The company reported a 22 per cent lift in operating earnings before interest, tax, depreciation, amortisation and financial instruments to $233.6 million in the six months to December 31.

"Based on a strong half year and positive outlook, the company is increasing its EBITDAF guidance from $391 million to $420 million to $435 million, subject to any unforeseen market or hydrology conditions," said MRP chair, Joan Withers in a statement.

Net profit after tax was up 15.8 per cent at $85.2 million, although underlying earnings - a measure that strips out one-off impacts that can skew earnings comparisons - of $88.7 million were up only 4 per cent on the same period a year earlier, as increased revenues were offset by higher depreciation costs, lower capitalised interest and higher debt levels.

These reflected a special dividend paid last year, the completion of capital expenditure projects, and an asset revaluation at June 30.

The company announced a 15 per cent increase in interim dividend to $64.7 million.

"The increased total capacity and balance of our portfolio enabled an 18 per cent lift in generation volumes to 3,504 Gigawatt hours," said chief executive Doug Heffernan. "This cushioned the impact of weather extremes, ranging from drought to some of the highest inflows in the Waikato."

Total hydro production was up 6 per cent to 2,209GWh, but the most dramatic change was a 69 per cent increase in output was from geothermal power, reflecting the commissioning last year of the 140 Megawatt Nga Awa Purua station. That reduced the share of generation from hydro by MRP to 63 per cent of its total production for the period.

Heffernan also updated progress on its next proposed geothermal development, Nga Tamariki, which would not be operational before the end of 2013, at the earliest, with the actual date governed by commercial negotiations currently way.

Contact Energy announced last week it was going ahead with a 114MW net increase in total production with construction of the Te Mihi geothermal power station, near Wairakei, for completion in mid-2013.

In the competitive retail electricity market, Heffernan intimated that MRP chose to let total customer numbers fall by 10,000 to 402,000 at December 31, after aggressively acquiring customers "at a faster rate and to a higher level than planned" in the previous financial year.

MRP was "comfortable with a market share around 20 per cent", and with the strong growth in its South Island customer base.

The company's international geothermal consultancy, GeoGlobal Energy was now active in the US, Chile, and now also Germany.