Vector profit jumps 125%

Tuesday 25th August 2009

Vector, New Zealand’s biggest electricity and gas distributor, posted a 125% jumped in full-year profit, reflecting a profit on the sale of its Wellington lines business and cost cutting.

Net profit rose to $370.5 million, or 37.1 cents a share, in the 12 months ended June 30, from $164.4 million, or 16.4 cents, a year earlier, the Auckland-based company said in a statement. Revenue from continuing operations fell 0.7% to $1.17 billion, while earnings on the same basis climbed 16% to $164.9 million, beating the $159 million median estimate in a Reuters survey.

Chief executive Simon Mackenzie said the utility faces a number of challenges going forward, including greater regulatory controls and waning new connections.

To bolster its revenue streams, vector has invested in smart metering systems and has rolled out fibre optic cables in Auckland as it vies for a piece of the government broadband strategy.

“The way forward will be challenging given the regulatory reset, gas market dynamics and legacy contract roll-offs, couple with soft market conditions,” Mackenzie said in the statement. Opportunities to replicate cost savings of the past two years are “limited,” he said.

Shares of Vector gained about 1% to $2.07 and are little changed this year, edging up 0.5%. The company is rated a ‘hold,’ based on recommendations of seven analysts compiled by Reuters.

Vector will pay a final dividend of 7.25 cents per share, up from 6.75 cents a year earlier.

Businesswire.co.nz

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