Te Mihi, Contact Energy's newest geothermal power station in Wairakei. Profits have fallen at Mighty River after it decided to pull out of geothermal investments in Chile and Germany.
Te Mihi, Contact Energy's newest geothermal power station in Wairakei. Profits have fallen at Mighty River after it decided to pull out of geothermal investments in Chile and Germany.
Mighty River Power shares took a hit today after it announced a 93.5 per cent drop in profit to $8 million for the six months to December 31.
Shares fell 8c in early trading to $3.29.
Shares in fellow gentailer Genesis Energy, which today unveiled a net profit that more than tripled to $68.2 million, also fell slightly, down 2c to $2.24. Mighty River's bottom line was hit by a one-off write down in its geothermal development businesses in Chile and Germany which it is exiting.
Chief executive Fraser Whineray said the company had last year assessed the ventures no longer met its investment criteria.
Mighty River's earnings before tax also fell to $258 million, down $12 million due to lower hydro generation during a dry early summer and its decision not to renew lower yielding commercial sales contracts.
Underlying earnings were also hit. They were $90 million, down $15 million, reflecting lower earnings before interest, tax, depreciation, amortisation and financial instruments (EBITDAF) and higher interest and depreciation costs following the commissioning of Ngatamariki geothermal station.
However the company says its dividend forecast for the full year is unchanged at 14 cents per share.
In updated guidance it says full year pre-tax earnings will be the range of $480 million to $500 million, reflecting prolonged low rainfall in its Waikato River catchment. An earlier estimate of $495 million to $520 million had assumed average hydrology.
Mighty River Power will maintain the forecast ordinary dividend of 14 cents for the full year and today declared a fully imputed interim dividend of 5.6 cents per share, to be paid on March 31.
Genesis Energy will pay an increased interim dividend of 8c a share, up form 6.4c in the prior corresponding period. It reiterated its intention to pay a full year dividend of 16c a share.
Mighty River chief executive Frasier Whineray.
The company said EBITAF increased to $172 million in the first half, up from $150.5 million.
The company was on track to meet or exceed its IPO forecast of full-year profit of $95.4 million but was "facing headwinds on achieving its 2015 Ebitdaf PFI forecast due to lower international oil prices and continued aggressive retail competition."
The number of gas and electricity customers fell 3 per cent to 639,000 in the period.
"This reflects increased competition from smaller niche retailers and discounted bundle offers from established competitors."
Customer switching rates have increased from 18.4 per cent on an annualised basis to 20.3 per cent.
That would be offset by cuts to operating costs and improved wholesale electricity prices, the company said.
"Genesis Energy expects that the current competition for customers in the retail electricity and gas markets will continue through 2015, with elevated switching rates and retailers willing to compete aggressively on price and with bundled products in targeted regions," chief executive Albert Brantley said.
