Vector first half profit down 2.8 pc

Vector chairman Michael Stiassny and chief executive Simon Mackenzie. Photo / Brett Phibbs

Network company Vector's half year net profit dropped 2.8 per cent to $98.5 million, as depreciation and interest costs rose.

Revenue for the six months to the end of December, lifted 1.4 per cent from a year earlier to $629.3m, while earnings before interest, tax, depreciation, and amortisation (ebitda) were up 2.5 per cent to $317.7m.

Vector Group chief executive Simon Mackenzie said that while electricity residential volumes were flat, business customers drove an increase in overall electricity volume, stemming a three year declining trend.

Gas distribution volume increased marginally and gas transmission volumes rose by 23.3 per cent on a year earlier.

Depreciation increased due to a growing asset base, and first half borrowing costs rose by $8.4m compared to a year earlier, including a one-off gain arising from the repurchase of floating rate notes. Tax was up $3.4m.

Vector, 75 per cent owned by a consumer trust, said an interim dividend of 6.75c per share would be paid.

Last week the company was named as a preferred bidder for the Government's ultrafast broadband initiative in Auckland, joining Telecom which was chosen earlier.

Vector's electricity sector reported a 3.6 per cent rise in half year revenue to $296.4m, with ebitda up $11.8m to $195.3m, and electricity volume up 1.8 per cent from a year earlier.

"We've seen less activity in the multi-dwelling apartment market. In contrast new connections for small to medium business and industrial/commercial customers nearly doubled," Mackenzie said.

Gas transportation revenue lifted 8.8 per cent to $111.5m, with ebitda up $1.4m to $87m, with the 23.3 per cent rise in gas transmission volume mostly due to a full six months of volume from the Kupe field.

In the gas wholesale sector revenue dropped to $199.3m from $215.7m a year earlier, with ebitda down $9.9m to $31.7m. Natural gas volumes were down 14.5 per cent, reflecting continued strong competition in the industrial and commercial market and the expiry of a major contract in December 2009, Vector said.

Gas liquid sales improved by 14.4 per cent, due to increased production levels at the Kapuni gas treatment plant, and improved LPG cylinder sales. Liquigas tolling volumes improved 32.6 per cent, reflecting a full six months' trading from a new business model.

- NZPA