Trustpower annual earnings up 13% on retail increases and Aussie wind

Trustpower [NZX: TPW], the Tauranga-based energy and telecommunications service provider, posted a 13% rise in its underlying full-year earnings, excluding revaluation of a major acquisition, to $122.9 million.

Consolidated profit after tax for the year to March 31, at $144 million, included a $25 million gain on the fair value of the company's purchase price for hydro and wind assets from the New South Wales government's Green State Power company last year.

On an earnings before interest, tax, depreciation, amortisation, fair value changes, asset impairments and discount on acquisition basis, earnings rose 19% on the previous financial year, to $330.7 million. Directors declared a final dividend of 21c, partially imputed at 14c a share, payable June 12. Combined with a 20c per share interim dividend, total distributions are up 2.5% on the previous year.

Trustpower shares were unchanged at $7.70 after the announcement this afternoon and are down 2.5% so far this year.

The result was at the "lower end of expectation due to a number of headwinds," chief executive Bruce Harker said in a statement. These included the strength of the New Zealand dollar against its Australian counterpart and less wind than average at windfarms on both sides of the Tasman.

The result was the first since the commissioning during the year of the Snowtown Stage 2 wind project in South Australia during the financial year, revaluation of which added $A309 million. That was the lion's share of the impact of generation asset revaluations worth a net $399 million, with a downward revaluation worth $6 million of New Zealand wind assets.

New Zealand retail customer numbers grew 10.5% to a total of 266,000 and the company said it expects similar growth again this year. Customers taking "two or more utility services" rose from 14.5% to 19.5% of the customer base over the course of the year, as Trustpower invested "heavily" in becoming the only major energy retailer offering not only electricity, reticulated natural gas and bottled LPG but also broadband and phone services.

The company declared some 24,000 gas customers, an increase of 10,000 over the year, while telecommunications services were up 23% to 38,000.

"While the retail market remained highly competitive throughout the year, Trustpower continued to experience lower levels of customer churn," Mr Harker said. Increased customer acquisition costs were worth $8 million off ebitdaf, while retail systems investment cost $7.5 million during the year.

"The outlook for Trustpower remains positive," Mr Harker said. "The 2016 financial year will see the first full year of earnings from contribution from Snowtown Stage 2.

"Trustpower expects to grow its retail customer base at a similar rate to the 2015 financial year and to continue to increase the number of multi-product customers, improving retail profitability."

Although the Australian federal government is expected to cut its Renewable Energy Target from 52,000 Gigawatt hours of state-assisted new, renewable generation to 33,000GWh, that is still almost double the 17,000GWh of installed generation already built under the scheme, which has been stalled during a policy review.

The company has three wind projects in NSW, SA and Victoria worth 890 Megawatts of potential development, with the first expected to be approved by the end of 2015.

(BusinessDesk)