Mighty River lifts earnings outlook on strong first half

Mighty River lifts earnings outlook on strong first half

By Pattrick Smellie

March 1 (BusinessDesk) – State-owned electricity company Mighty River Power Ltd. is lifting its pre-tax earnings forecast by up to 7.5% as it sees the benefits of $1 billion invested in new geothermal power stations.

The company reported a 22% lift in operating earnings before interest, tax, depreciation, amortisation and financial instruments to $233.6 million in the six months to Dec. 31.

“Based on a strong half year and positive outlook, the company is increasing its EBITDAF guidance from $391 million to $420 million to $435 million, subject to any unforeseen market or hydrology conditions,” said MRP chair, Joan Withers in a statement.

Net profit after tax was up 15.8% at $85.2 million, although underlying earnings – a measure that strips out one-off impacts that can skew earnings comparisons – of $88.7 million were up only 4% on the same period a year earlier, as increased revenues were offset by higher depreciation costs, lower capitalised interest and higher debt levels. These reflected a special dividend paid last year, the completion of capital expenditure projects, and an asset revaluation at June 30.

The company announced a 15% increase in interim dividend to $64.7 million.

“The increased total capacity and balance of our portfolio enabled an 18% lift in generation volumes to 3,504 Gigawatt hours,” said chief executive Doug Heffernan. “This cushioned the impact of weather extremes, ranging from drought to some of the highest inflows in the Waikato.”

Total hydro production was up 6% to 2,209GWh, but the most dramatic change was a 69% increase in output was from geothermal power, reflecting the commissioning last year of the 140 Megawatt Nga Awa Purua station. That reduced the share of generation from hydro by MRP to 63% of its total production for the period.

Heffernan also updated progress on its next proposed geothermal development, Nga Tamariki, which would not be operational before the end of 2013, at the earliest, with the actual date governed by commercial negotiations currently way.

Contact Energy Ltd. announced last week it was going ahead with a 114MW net increase in total production with construction of the Te Mihi geothermal power station, near Wairakei, for completion in mid-2013.

In the competitive retail electricity market, Heffernan intimated that MRP chose to let total customer numbers fall by 10,000 to 402,000 at Dec. 31, after aggressively acquiring customers “at a faster rate and to a higher level than planned” in the previous financial year.

MRP was “comfortable with a market share around 20%”, and with the strong growth in its South Island customer base.

The company’s international geothermal consultancy, GeoGlobal Energy was now active in the U.S., Chile, and now also Germany.

(BusinessDesk)

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