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Electricity and gas distributor Vector will unveil its half-year result tomorrow, with analysts forecasting a profit of between $84 million and $97 million.
Gains from head office cost cutting could be offset by lower electricity and gas volumes due to a warmer, drier spring, according to one analyst.
The company has around 35 per cent of New Zealand's electricity distribution market in Auckland and Greater Wellington as well as a gas supply system in major North Island centres.
Goldman Sachs JB Were analyst Matthew Henry forecasts a profit of $92.5 million. "I think it's going to be a sound result - the margin of error should not be too huge given its a utility company."
The half-year forecast was based on total revenue of $332 million for the period and he said evidence of cost control would be required to meet the company's top end earnings estimate of $642.4 million for the full year.
Goldman Sachs is forecasting a full-year profit of $158 million.
The company has announced a series of upper management changes and some job losses in the past two months.
"There's been a new management team taking a broader view of the business," Henry said.
Although only a small part of revenue, the price Vector pays for gas has increased from use of the lower priced Maui and Kapuni gas to higher cost Pohokura gas.
The warm spring in Auckland and Wellington would also hurt the company.
Forsyth Barr analyst Andrew Harvey-Green is picking an interim profit of around $86.4 million for the first half.
"I expect the electricity side to do okay, the gas side will be interesting - gas prices have gone up, volume has gone down."
The company is looking to sell its Wellington electricity network and an update on progress is expected tomorrow. Harvey-Green said the company was optimistic in its aim to get around $700 million for the business, with most likely buyers being smaller lines companies with Australian backers.
"I'm picking the value of that business around $550 million-$600 million. I'm very interested to see what happens there," he said.
The company also faces a threat to revenue through a Commerce Commission ruling on price next April.
"The electricity business under the current threshold is doing quite well but I do have some significant concerns around the possible price reset for Vector."
ABN Amro's Rob Foster is forecasting $96.9 million, also pointing to gains from restructuring but some losses from major gas customers not renewing contracts.
Soon after listing on the NZX in 2005 the company's shares were hit by unfavourable Commerce Commission rulings on its pricing policies. Vector's shares closed at $2.05 yesterday, up 2c on Monday's close.