Trustpower annual profit climbs 37% post-Tilt demerger, bolstered by Australian hydro

Trustpower lifted annual profit 37 percent as the electricity generator-retailer's earnings were bolstered by strong hydro production and favourable prices in Australia, and a full-year contribution from King Country Energy.

Net profit rose to $94 million, or 29.6 cents per share, in the 12 months ended March 31 from $68.5 million, or 21.7 cents, a year earlier, the Tauranga-based company said in a company. Trustpower carved out its Australian windfarms into separately listed Tilt Renewables, and the year-earlier figures have been adjusted to reflect the change.

Earnings before interest, tax, depreciation, amortisation and changes in the fair value of financial instruments rose 5 percent to $218 million, including a $17 million demerger cost. That met Trustpower's guidance for ebitdaf to be at the top of the forecast range of $215 million-to-$235 million, excluding the demerger cost. It has the same forecast range for 2018 earnings.

"The year was characterised by strong generation volumes, particularly in Australia where the increased volume was also associated with very high spot prices," chief executive Vince Hawksworth said. "While wholesale prices in New Zealand remained well below long-run average, the increased volumes nonetheless drove a very positive uplift in profitability."

Trustpower's Australian hydro stations boosted production 41 percent to 359 gigawatt hours while spot prices were up 81 percent, helping drive a 154 percent increase in ebitdaf from that unit to $32 million. New Zealand production climbed 27 percent to 2,017 GWh, although a 13 percent fall in spot prices meant ebitdaf only rose 13 percent to $169 million.

The retail division posted a 20 percent drop in ebitdaf to $45 million as margins were squeezed by increased competition. Trustpower also spent more to improve its level of service as it tries to build out its offering to include bundled telecommunication services. It plans to strip out some of those costs in the current financial year.

The board declared a final dividend of 17 cents per share, payable on June 9, taking the total return for the year to 33 cents. The payment will be Trustpower's first fully imputed dividend "for a number of years" and it expects to keep imputing those returns for the foreseeable future, it said.

The shares last traded at $5.02 and have increased 5.98 percent so far this year.

(BusinessDesk)