Trustpower, New Zealand's 5th biggest electricity retailer, reports 40 per cent drop in profit

Thursday, 7 November 2019

A surprise outage at one of its generators has helped slash Trustpower's first half profit by 40 per cent.

The Tauranga-based power and telco operator made $39 million for the six months to September 30, down from $65m last year.

The result was pulled down by a 15 per cent fall in Trustpower's generation volumes and a three-month unplanned shutdown at its Highbank generator in Canterbury.

Trustpower made $39 million for the six months to September 30, down from $65m last year.

The outage, caused by a wayward bearing, resulted in the loss of all the water which had been stored there for electricity, chief executive Vince Hawksworth said.

* Parts of New Zealand left out of power price war

* Time may be up for TrustPower's competitive nirvana**

However, the bigger impact on its generation had been the climate - lower rainfall cut its North Island generation volumes by about a fifth.

'The big part of our challenge was also that it just didn't rain in the right places at the right time, compared with the two previous years.'

Hawksworth said the Highbank outage, while significant, equated to just 2 per cent of its total annual output.

The company is now projecting full year earnings at the lower end of its guidance, around $200 million to $215m, instead of $205-$225m.

Volatile wholesale power prices are always a factor for Trustpower, which generates about half its power and buys the rest.

For that reason, the current above average wholesale power prices were both a blessing and a curse.

Hawksworth said the company tried to buy its power well in advance so the rest of the year was largely 'locked and loaded, assuming the rain appears as it should'.

While about 80 per cent of the company's pre-tax earnings come from electricity, there was positive growth in Trustpower's developing foray into telecommunications.

Last month the company hit 100,000 telco customers, making it the 'joint fourth' biggest telco in the country for fixed-line services. Power, gas and broadband 'bundles' meant more than a quarter of its 406,000 retail utility customers were now receiving two or more of its products.

Trustpower recently launched a wireless broadband service in partnership with Spark and plans to move into mobile phone services towards the middle of next year using Spark's tower network.

The company's retail revenues of $507m rose 4 per cent on the same period last year and retail accounts were up 7000 on the year before.