Vector first-half profit rises on sales growth, one-time gain

Vector, the Auckland-based electricity and gas distributor, posted a 7% gain in first-half profit, driven by stronger sales, lower finance costs and a one-time gain after a Court of Appeal ruling on a tax claim.

Profit rose to $107 million in the six months ended December 31 from $100 million year earlier, Vector said in a statement. Sales rose to $626 million from $591 million.

Vector's earnings included a $15 million gain as a result of a Court of Appeal judgment in its favour in a dispute with the Inland Revenue Department over the tax treatment of payments from Transpower for access to parts of Vector's Auckland electricity network including a tunnel and a series of land rights. First-half profit from continuing operations jumped 65% excluding the contribution from Vector Gas, which was sold for $952.5 million with proceeds used to repay $610 million of debt.

Chairman Michael Stiassny affirmed that full-year adjusted earnings before interest, tax, depreciation and amortisation would be broadly in line with the 2016 result of $473 million, at the top end of its guidance last August of $460 million to $475 million. Adjusted ebitda in the first half was $257 million.

Vector breaks down its results to its regulated and unregulated businesses. Adjusted ebitda for its continuing regulated networks business fell 0.4 percent to $195.7 million, which it said reflected a 19% increase in new electricity and gas connections, offset by the impact of warmer weather and "the continuing decline in household power consumption."

Adjusted ebitda for its unregulated businesses rose 2.3% to $84 million, with growth in its New Zealand metering business and a one-time insurance gain, offsetting costs associated to expand metering in Australia, the commercialisation of new technology and ongoing low hydrocarbon prices.

The company will pay a first-half dividend of 8c a share, up from 7.75c a year earlier.

Vector shares last traded at $3.25 and have gained1.6% in the past 12 months, lagging behind the S&P/NZX 50 Index's 15% gain.

(BusinessDesk)