By Jenny Ruth
|
Thursday 13th August 2009 |
Text too small? |
On Friday, Contact Energy is likely to report a $109 million net profit for the year ended June 30, down 54% on the previous year, says Forsyth Barr analyst Andrew Harvey-Green.
"This has been an extremely tough year for Contact and so the positives are reasonably limited," Harvey-Green says, adding the main positive will be the company's future profit guidance. "In particular, we expect Contact to reduce its capital expenditure forecasts in light of the stronger New Zealand dollar," he says.
"Over the past month, there has been a turnaround in the short-term issues that largely caused the 2009 result and signs that normality is returning to the wholesale market."
He expects the LPG business will have performed well. While volumes have been under pressure, the profit margins should be strong because LPG purchase costs have fallen significantly while retail prices have been "sticky."
As a signal to investors this was a one-off year, the company is likely to maintain its 28 cents a share final dividend, he says.
The negatives include extreme hydro conditions and Contact's "unfortunate" decisions to raise prices and to increase directors fees. The result has been a 7.5% fall in customer numbers to about 480,000.
BROKER CALL: Forsyth Barr rate Contact Energy (NZX: CEN ) as accumulate.
No comments yet
UPDATE Contact increases dividend as FY earnings rise; quits wind projects
Contact increases dividend as FY earnings rise in competitive market
Contact shares drop to 2-month low, says 'hard to see' investment under Labour-Greens plan
Contact Energy, parent Origin mull redemption of $2.03 bln of notes after S and P change
Solid first half for Contact, despite retail margins squeeze
Contact sells mothballed New Plymouth power station for $24 mln
Contact Energy's King hints at greater returns as cash mounts
Contact energy beats FY profit forecast as revenue surges
Elliott leaving Contact for Origin role
Contact sees 2014 cash-flow boost as projects put on ice
