Vector profits as broadband decision looms

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

Electricity and gas network owner Vector reported steady earnings in the year to June 30, with underlying net profit up 4.3 per cent to $172.6 million on a revenue increase of 1.1 per cent to $1.19 billion.

Earnings before interest, tax, depreciation and amortisation fell 1 per cent to $578.1 million.

Direct comparison with the previous results excludes the one-off
$206 million impact in the previous year of the sale of Wellington Electricity Ltd.

Directors announced a 0.25 cent per share increase in final dividend to 7.5 cents, bringing total distributions for the year to 14 cents, fully imputed, with the final dividend payable on September 13.

"This is a positive result, given the economic conditions and subdued demand from customers," said chief executive Simon Mackenzie in a statement to the NZX.

The company was "comfortable" with undisclosed market analysts' views of profit for the current financial year.

The Vector share price was unchanged at $2.08 as trading opened on the NZX this morning.

Ebitda growth in electricity and gas transport was offset by an anticipated decline in wholesale gas and shared services earnings, while reduced debt and lower interest rates dropped net borrowing costs by $22.5 million to $167 million.

Depreciation charges rose 7.5 per cent to $156.3 million, reflecting growth in the company's asset base.

Mackenzie hit out at regulated rates of return being proposed by the Commerce Commission for electricity network owners, saying they were out of whack with Australia.

"Regulation must deliver certainty and be an appropriate mix of theory and commercial reality," he said.

"The regulator must sense-check its theoretical views against commercial expectations, incentives, benchmarks and practice.

"For example, the Commission's draft decision on weighted average cost of capital can't be on part or below the level set by Australian regulation, given the need to attract international capital to New Zealand."

The company remained committed to being part of the government's ultra-fast broadband roll-out.

"Our solution is locally owned, simple, clean, fast and ultimatum free."