Earnings before interest, tax, depreciation, amortisation and changes in the value of financial instruments were down 4% to $482m.
Mighty River Power CEO Fraser Whineray talks about his company's result on NBR Radio and on demand on MyNBR Radio.
Mighty River Power [NZX: MRP] has become the latest electricity generator-retailer to announce a special dividend in the current earnings season, at the same time as announcing a 22% fall in underlying earnings after tax for the year to June 30 of $145 million.
Auckland-based MRP, which operates as a retailer under the Mercury Energy brand, took a $127 million one-off hit to its net profit after tax through writedowns after exiting international geothermal investments and from the decision to close its Southdown thermal power station in Auckland. Those were the main factors behind a 76% fall in net profit to $47 million.
Earnings before interest, tax, depreciation, amortisation and changes in the value of financial instruments were down 4% to $482 million and represented a "robust result in challenging conditions," chief executive Fraser Whineray said in a statement to the NZX. In the current financial year, MRP is forecasting an ebitdaf surplus of between $490 million and $515 million.
Lower ebitdaf in the last financial year was "driven by low hydro generation at 17% below average, due to reduced Waikato catchment inflows," Mr Whineray said. "The financial impact of lower hydro production was $52 million, compared with long term average conditions."
Nonetheless, the company will spring another 2.5c per share special dividend for shareholders, having already declared a 5c special payout in December last year. On top of that, a final dividend of 8.4c takes ordinary dividends for the year to 14c, up 4% on the previous year, with guidance given to expect a further 2% increase in the current financial year of 14.3c.
"The board is pleased to be returning a total of $296 million to MRP's owners for the year, representing a 59% year-on-year lift in cash returns," the company's chairwoman, Joan Withers said. MRP remains 51% government-owned after partial privatisation in 2013.
Two of its competitors in the sector, Contact Energy and Meridian Energy, have both announced special dividends in the last financial year, reflecting the fact that electricity generators are expecting several years of strong free cashflows as supply and demand remain in rough balance and there is no requirement to make major investments in new generation plant. Genesis Energy is also reviewing its approach to capital management.
Contact, MRP and Genesis Energy have all announced the closure of gas and coal-fired power plants, which will remove more than 1000 Megawatts of capacity from the national electricity system, creating pressure on wholesale electricity prices from about 2018 onwards, according to presentation slides accompanying the MRP result.
The latest result was earned on total electricity generation of 268 Gigawatt hours, up 4% on the previous year, to produce revenue of $1.63 billion, slightly down on the $1.67 billion recorded the previous year, to produce an energy margin after the cost of network and other charges of $648 million, compared with $687 million in the prior year.
Free cashflow for the year totalled $230 million, compared with $257 million the previous year.
The shares last traded at $2.72 and have declined 8.7% this year.
(BusinessDesk)
