TrustPower first-half profit rises on reduced spot purchases

Monday 3rd November 2008

TrustPower, the utility controlled by Infratil, posted a 4% gain in first-half profit after it increased production, reducing its purchases of electricity on the spot market.

Net income rose to $66.8 million in the six months ended September 30, from $64.3 million a year earlier, the Tauranga-based company said in a statement today.

TrustPower boosted hydroelectric power production in the first half, helped by increased rainfall later in the period. That helped reduce the need for spot purchases at a time when the weighted average price almost tripled from the previous year because of prolonged drought.

Despite global financial turmoil, "the business fundamentals are sound, which augurs well for a satisfactory annual result," chairman Bruce Harker said.

The company raised its first-half dividend by 1 cent to 16 cents and announced a special dividend of 10 cents a share.

TrustPower's shares were unchanged at $7.40 and have declined 20% in the past year. The company trades at about 24 times earnings, more than the P/E of rival Contact Energy, at about 18 times. Infratil, which owns 50.5% of TrustPower, rose 1% to $1.95.

The company sold about 210,000 tons of emission credits during the period, it said.

Separately today, the company said it plans to sell as much as NZ$100 million of December 2015 bonds with a coupon of 8.4% this week, to refinance maturing debt.

By Jonathan Underhill

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