Transpower Announces Half-year Results

Transpower New Zealand today released its financial results for the six months ending 31 December 2022, which are set out below. However, subsequent to the reporting period, the North Island of New Zealand experienced widespread devastation when Cyclone Gabrielle made landfall on 12 February. Due to significant and extensive damage to Transpower assets, power was lost to the Hawkes Bay and Gisborne regions and the company declared a grid emergency.

Restoring power to affected regions has been an immediate priority and Transpower has accordingly deferred some less-urgent work and regular maintenance. The company is in the early stage of modelling financial impacts. While costs are expected to be significant, insurance is held for the affected assets.

Financial results for the six months ending 31 December 2022

• Operating revenue increased by 1.0% to $447.8 million (2021: $443.4 million).
• Operating expenses were $166.4 million, a 9.7% increase from the previous period (2021: $151.7 million), primarily due to increased investigation costs in preparation for a step up in capital expenditure, and higher resourcing costs.
• Net profit after tax was $63.9 million, a 23.5% decrease from the previous period (2021: $83.5 million), primarily due to higher operating expenses and higher dismantling costs.
• Capital expenditure was $172.7 million, a 19.8% increase from the previous period (2021: $144.1 million) and in line with Transpower’s approved capital programme.
• An interim dividend of 4 cents/share or $48 million has been declared, representing 40% of the expected full-year dividend forecast in Transpower‘s 2022/23 Statement of Corporate Intent (SCI).

Transpower Chair Dr Keith Turner said that while the resourcing impacts of COVID-19 were still being felt across the industry, along with continuing supply-chain disruption, the company has maintained strong relationships with suppliers and service providers to ensure maintenance and capital programmes remain firmly on track.

“Increases in operating expenses show the financial implications of an uncertain labour market in New Zealand, yet in spite of these challenges we are currently on track to achieve all of our SCI targets,” he said.

The bedding in of Transpower’s new grid services contracts has been central to safeguarding secure workforce capability. The company is well placed to deliver the substantial volume of work that will be necessary to support customers’ needs in the coming years.

Chief Executive Alison Andrew said that the new grid service contracts have ensured Transpower has the right partners to help physically maintain the grid and meet the rapid infrastructure growth that will be required to enable Aotearoa New Zealand’s transition to net zero carbon.

Transpower recently met a key operational milestone with the submission of its first Major Capex Proposal to the Commerce Commission under its Net Zero Grid Pathways programme. The proposed $393m investment will enable three projects that are designed to enhance and maximise the existing grid backbone to support an electrified economy. 

Andrew said: “As a consequence of Cyclone Gabrielle we have shifted our immediate focus to reconnecting disconnected customers and addressing the significant remediation issues. Alongside this, we will continue to work collaboratively with all our stakeholders so we can meet the challenges involved in empowering Aotearoa New Zealand’s energy future, as laid out in our key document Whakamana i Te Mauri Hiko.”

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