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Contact Energy has reported a bottom line loss of $7 million due to one-off factors, while its operating profit fell by $76 million to $246m.
The operating result was in line with market expectations.
Chief executive Mike Fuge said Contact’s financial performance reflected soft short-term wholesale market conditions.
The net loss came after recognising an onerous contract provision of $120m ($86m after tax) following a review of the estimated available capacity of the Ahuroa Gas Storage Facility (AGS) in Taranaki.
Excluding AGS, the underlying net profit was $79m.
Contact said its ebitdaf (pre-AGS provision) was a result of lower wholesale prices, lower renewable and thermal generation, and increased operating costs.
Contact kept its first half dividend at 14 cents a share.
Fuge said the non-cash accounting adjustment recognised the difference between expected benefits received and the contracted schedule of payments.
Its underlying net profit of $79m was down $55m from a year ago on lower operating earnings (ebitdaf) and unfavourable movements to the fair value of financial instruments, partially offset by lower depreciation and lower tax on earnings against the prior year.
The underlying ebitdaf was down 24 percent on the record result of in the first half of 2022, with lower wholesale prices, lower renewable and thermal generation and increased operating costs to deliver on strategic growth priorities and reflecting inflationary conditions.
Contact Energy's Clyde power station. Photo / Grant Bradley
“Contact’s financial performance reflected the soft short-term wholesale market conditions experienced in the half year,” Fuge said.
“We saw unprecedented hydro inflows which depressed market prices and saw greater price separation between the North and South Islands.
“We responded [by] running less thermal generation and positioned our portfolio to benefit from expected improved market conditions in the second half,” he said.
Global energy and supply concerns continued to impact commodity markets, with international energy prices including for coal holding at unprecedented levels, he added.
Domestic gas output remained constrained and readily accessible storage has reduced.
Demand for renewable electricity remained strong.
Fuge said Contact is focused on five key areas for demand growth, being large scale 24/7 data centres, industrial process heat, major industrial energy users, road transport and “green” chemicals.
Rio Tinto is looking to continue operating its unique low carbon aluminium smelter at Tiwai Point – the country’s biggest power user - beyond 2024.
