Low hydro flows and unplanned shutdown impact Trustpower’s half-year results

A generally lower outcome for the half year to September 30 has been reported by Trustpower, New Zealand’s fifth largest electricity generator and fourth largest energy retailer.

The result, while down on the same period last year, was impacted heavily by reduced generation volumes and costs associated with a three-month unplanned outage at the Highbank scheme in Canterbury, as well as climate and hydrology, Trustpower chief executive Vince Hawksworth says.

Investment into Trustpower’s ISP network and continued growth in the capability of the business also impacted the result, he adds.

Generation volumes were down 177GWh (15%) on the same period last year, due to some plant

outages and materially lower North Island inflows (22% decline) compared to the above-average H1

FY-19, the company reports.

Profit after tax of $39m was down 40%, underlying earnings after tax of $49m were down $17m (25%), operating earnings (EBITDAF) of $107m were down 17%, operating cash flow of $59m was down 3% and the fully imputed interim dividend was set at17 cents per share.

Wholesale prices were materially above the comparative period in FY-19 and remain above long-run averages, the company says.

Trustpower is one of the fastest growing telcos in New Zealand, reaching 100,000 telco customers in

October 2019. Total retail utility accounts reached 406,000, up 7000 on the same time last year,

while customers with two or more products rose 8.8% to over 111,000.

Total retail revenues of $507m were up 4% on the same period last year.

Leveraging the successful bundling strategy remains a key growth opportunity for the future, it says.

During the half year, Trustpower has invested significantly in developing capability for the future across retail and generation divisions. Operational highlights include the successful

implementation of ISP network strengthening, development of wireless broadband capability,

continued investment into building capability and Trustpower’s ability to respond to generation asset management challenges, such as those faced at Highbank and Waipori.

Trustpower chair Paul Ridley-Smith says the board is “focused on ensuring the business has the

platforms and capability to succeed in a low emission electricity sector and an ever-increasing desire

for data and quality digital access”.

Trustpower is implementing a structured generation enhancement programme over the next five years with an anticipated increase in average annual output of about 60GWh per year.

The Highbank outage represented a 43GWh loss which, while significant, represented only about 2% of total annual Trustpower output.

Retail was impacted by generally warm weather through autumn, increased electricity input prices

and a continuation of investment in customer acquisition and service – retail EBITDAF producing $13.9m and continuing to show strong underlying performance.

It expects FY-20 EBITDAF to be in the $200m-$215m range and the company remains positive on the longer-term outlook.

“Trustpower’s strong balance sheet and operational capability means it is in a good position to

capitalise on opportunities, and the future is very exciting,” Ridley-Smith concludes.