UPDATE: WEL Networks doubles 1H profit

UPDATE: WEL Networks doubles 1H profit

(Updates with consumption growth, fibre connections from fifth paragraph.)

By Gavin Evans

Nov. 27 (BusinessDesk) - WEL Networks almost doubled its first-half profit as expansion of its fibre business boosted revenue and growth in Waikato increased residential connections and commercial volumes.

Net income rose to $21.2 million in the six months through September, from $10.8 million a year earlier. Revenue increased by $19 million to $109.8 million – with electricity revenue $8.7 million higher at $74 million and fibre revenue $7.2 million higher at $31.7 million.

Operating expenses were $1.4 million higher at $47.8 million.

Hamilton-based WEL is the country’s sixth-largest power distributor, supplying about 92,000 homes and businesses. It is benefiting from strong growth across its region and the on-going roll-out of fibre broadband services across the central North Island.

The community trust-owned company added about 1,400 new power accounts in the year ended September, according to Electricity Authority data. At the end of September its Ultrafast Fibre business had 107,300 active subscribers – 22,000 more than a year earlier.

WEL said that power demand in the period increased by about 20.4 gigawatt-hours, or 3.1 percent. That, and on-going connection growth, increased revenue by about $2.5 million, the company said. That helped offset a $3.6 million reduction in lines revenue after WEL reduced average residential charges by about 8 percent from April and discontinued its customer discount.

The company, which is also transitioning its residential and small business consumers onto time-of-use plans to assist the take-up of new technologies like solar and EVs, had paid out almost $9.6 million in discounts in the September-half last year.

Ultrafast Fibre – formed with neighbour Waipa Networks to participate in the Crown’s ultrafast broadband roll-out in 2012 – said about 207,000 home and businesses were able to access its network at the end of September.

That reflected the first towns being connected under UFB2 - the second phase of the Crown-funded roll-out – and greenfields growth.

The company noted that cities like Hamilton and Tauranga have among the highest fibre uptake rates in UFB areas at 57 and 56 percent respectively.

“New Plymouth and Cambridge also reached the 50 percent mark in the period,” the company said in an emailed statement.

WEL bought out the Crown’s interest in the UFB partnership in 2016.

Today it said that net debt increased by about $36 million to $513 million at the end of September, with the increased borrowings largely due to the completion of the UFB2 build. Total group assets stood at $1.2 billion, a $46 million increase since March.

WEL’s accounts show earnings before interest, tax, depreciation and amortisation from the electricity network increased to $42.7 million, almost $10 million more than a year earlier. Fibre earnings almost reached $18 million, $7.6 million more than a year earlier.

The company has $150 million of bonds listed on the NZX's debt market. The notes mature in 2023 and pay annual interest of 4.9 percent. They last traded at a yield of 4.3 percent.

(BusinessDesk)

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