Contact Energy lifts first-half profit 72% as it benefits from strong hydro generation
Monday, 14 February 2022
Contact Energy lifted its first-half profit 72 per cent as it benefited from strong hydroelectricity generation in the South Island, which is cheaper for it to produce.
The company posted a profit of $134 million in the six months to the end of December, up from $78m in the same period a year earlier. Revenue slipped 0.2 per cent to $1.14 billion, while operating expenses fell 8.7 per cent to $817m.
Contact produces more than 20 per cent of the country’s electricity from hydro stations in the South Island, and geothermal and gas-fired thermal power stations in the North Island. Hydro generation was up 6 per cent when compared with the same period a year earlier, which reduced the need for more expensive thermal generation.
“We’ve seen double-digit growth in our operating earnings and profit off the back of a period of strong hydro generation,” said chief executive Mike Fuge.
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“When it rains, operating earnings increase as we don’t have to run more expensive thermal generation, but cash flow is impacted as we store the gas we purchased for use in the future.”
Contact is moving away from thermal generation, and has reduced its dividend to invest in renewable electricity. It is developing the Tauhara geothermal plant, extending its geothermal consents at Wairakei, is looking at developing a geothermal power station at Te Huka, and has secured land access rights for wind projects across New Zealand.
The company will pay shareholders a first-half dividend of 14 cents per share, unchanged from the same period a year earlier. It aims to pay 35 cents per share for the full financial year.
Shares in Contact edged up 0.5 per cent to $8.10 in mid-afternoon trading on the NZX on Monday.