Waikato drought hits MightyRiver earnings

Waikato drought hits MightyRiver earnings

Aug. 31 (BusinessDesk) – State-owned electricity generator and retailer MightyRiverPower Ltd. reported substantially reduced earnings in the year to June 30, with underlying earnings falling 34% to $139.6 million, compared with a record $211.7 million last year.

The conditions that produced the previous year’s result – a coincidence of high Waikato hydro system inflows and high wholesale power prices – reversed in the year under review, with a severe Waikato catchment drought coinciding with high spot prices.

“The result is within the forecast range indicated previously… and, as anticipated, is significantly lower than the exceptional result achieved in the previous year,” said chief executive Doug Heffernan in a statement.

MRP will pay a $30.6 million dividend final dividend to the government. The accounts include a $24.2 million write-down on the value of unsuccessful developments, mainly reflecting the exploration costs for the Albacore-1 offshore oil well, which came up dry during the year.

A 20% increase in geothermal electricity production, thanks to the commissioning during the year of the 140 Megawatt Nga Awa Purua geothermal project, helped fill the electricity generation gap created by low hydro conditions.

However, water remains MRP’s biggest fuel source, contributing 3,730 Gigawatt hours to the total 5,812GWh generated during the year, down 14% on the year before. Net profit after tax was $84.6 million, well down on the record 2009 result of 159.6 million, particularly reflecting $54.9 million of non-cash, after tax movement, including a $27.9 million hit from the fair value of financial instruments, particularly electricity and interest rate derivatives and the failed projects write-off.

Performance against key Statement of Corporate Intent targets showed a return on capital employed of 8.2%, against a target of 8.5%, while return on average equity employed was slightly above target at 9.7% (9.6%).

MRP revalued its assets during the year, adding $371 million to a new total of $4.3 billion.,307m.

(BusinessDesk) 11:36:41

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