Trustpower first-half profit falls 13% as electricity sales decline

Thursday, 5 November 2020

Trustpower first-half profit fell 13 per cent after the country’s fourth-largest energy retailer sold less electricity.

After-tax profit fell to $33.6 million in the six months to September 30, from $38.7m last year, the company said.

New Zealand electricity demand has been relatively flat over recent years and Trustpower has moved to widen its services to include telecommunications and gas in a bid to get more customers.

In the first half, sales of electricity, which make up 82 per cent of Trustpower’s operating revenue, fell 7 per cent to $415.8m. Telecommunications revenue rose 8 percent to $50.7m, while gas revenue edged up 3.6 per cent to $18.1m.

**READ MORE:

* Trustpower wants to keep power on for financially stressed Kiwis

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

* Bundling services paying off for Trustpower

**

Trustpower’s pre-tax profit for its retail business increased 38 per cent to $19.2m, which chairman Paul Ridley-Smith attributed to product and margin growth.

“Telco customer numbers continue to increase, with 50 per cent of customers now taking two or more products,” he said. “Higher margins reflect a shift to unlimited and high-speed fibre plans.”

The company spent less on trying to get new customers during April’s lockdown, he said.

Trustpower, which generates power from 19 hydro schemes, said its generation volumes fell 4 per cent due to the impact of significant and prolonged drought conditions, particularly in the North Island.

The company’s pre-tax profit from electricity generation fell 2.9 per cent to $91.9m. The sale of its meter business last year meant it no longer received revenue from that source, he said.

Results for the first half “were impacted by weather but the expected lift, particularly in retail performance, has materialised despite Covid-19, which is pleasing,” Ridley-Smith said.

Trustpower expects full-year pre-tax profit of $185m to $205m.

“This forecast has been driven by lower volumes across the first half of the year and current below average lake storage levels at some of our schemes,” Ridley-Smith said.

“Wholesale prices, average residential energy consumption, mass market customer numbers and bad debt levels are all expected to remain broadly consistent.”

Trustpower has refinanced all its debt due in 2020 and said its existing facilities can accommodate the current levels of uncertainty.

The company will pay a 17 cent a share dividend, unchanged from last year.

Its shares last traded at $7.05, and have slipped 3 per cent this year.