FIRST CUT: Vector first-half profit rises 7% on sales growth, one-time gain

Friday 24th February 2017

Vector, the Auckland-based electricity and gas distributor, posted a 7 percent 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 Dec. 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 percent 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 percent 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 8 cents a share, up from 7.75 cents a year earlier.

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

BusinessDesk.co.nz

Comments from our readers

No comments yet