Solid profit has Contact on track

By CHRIS DANIELS energy writer

Contact Energy, the nation's largest private power company, has announced a solid profit of $30.1 million for the six months to the end of March.

This is down from $35.7 million for the same period last year, but that profit included $10 million from a one-off sale of generation equipment.

Chief executive Steve Barrett said the company was on track to meet the full-year profit of $102 million forecast by valuer Grant Samuel last year.

Contact's total revenue for the six months was $453 million, up from $444.1 million the year before.

Retail electricity sales grew by 17 per cent. Most of the increase came from existing customers using more power.

Contact sold 2349 gigawatt hours (GWh), to its customers, up 12 per cent on the 2092 GWh sold in the same six months last year.

Customers increased more than 5 per cent, from 494,000 to 520,000.

Barrett said this increase could be attributed to factors such as the adoption of the Flybuys loyalty programme, selling both gas and electricity to customers and the work of Empower, the wholly-owned subsidiary that sells Contact electricity.

Revenue from gas sales was $65.5 million compared with $66.3 million for the same period the year before.

Contact makes most of its money over winter, when more power is used, and its thermal plants can run nearer full capacity.

High flows into the South Island hydro lakes during December and January made it less attractive for Contact to use its thermal power stations, as they were competing with cheap hydro power. This rain meant wholesale electricity prices were down by 7 per cent from the same period last year.

Contact's "hedging position" had been improved since last year, said Barrett, as more of its generation was matched to electricity customers on the retail side of its business.

The company went into last winter without about 70 per cent of its generation committed, but this had now increased to about 75 per cent. This meant Contact had less exposure to the volatile spot market.

But because this hedging position was dependant on the time of day and sophisticated types of contracts with bigger consumers, the overall position of the company was little changed.

A fully imputed dividend of 5.5c a share will be paid - the same as that paid for the same six months last year. A further 2.5c of final dividend, also fully imputed, will be paid for the six months to September 30 last year. These will be paid on or around May 31.

Contact shares closed up 8c at $4.12 yesterday.