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Tuesday 24th February 2009 |
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Net income fell to $25.1 million, or 4.35 cents a share, from $117.4 million, or 20.14 cents, a year earlier, the company said in a statement. Sales rose 11% to $1.2 billion.
Contact says much of the blame for the profit slump rests with the reduced capacity on the Cook Strait cable since the loss of pole one of the HVDC. That hampered its ability to send power south when hydro lake levels were low, forcing the utility to buy power at market rates to supply customers. Subsequent rains coincided with a cut in output at the Tiwai Point aluminium smelter, forcing power companies to spill water from their dams.
"What the six month period reinforces is how dependent New Zealand is on a robust and reliable transmission grid. It's the backbone to move electricity from power stations across the country to customers," said chief executive David Baldwin.
"Over the past year it has become manifestly clear that many parts of New Zealand's transmission system have been unable to cope with requirements," he said.
The company will pay a first-half dividend of 11 cents a share.
Contact is pressing ahead with plans to increase North Island capacity, including the first phase of the Tauhara geothermal project near Taupo and a 200 megawatt gas-fired power station at Stratford. The company is also developing an underground natural gas storage facility near Stratford. The three projects represent investment of more than $500 million, Baldwin said.
Contact is making good progress on consenting two North Island wind farm sites, though power prices would need to rise to make the projects viable.
The company also today announced plans to raise funds selling bonds next month and has registered a prospectus, it said.
Contact will offer shareholder distributions in the form of non-taxable bonus share, with the option to have them bought back by Contact.
Chairman Grant King announced the retirement of director Tim Saunders and said Baldwin and Sue Sheldon have been appointed to the board.
The utility is half owned by Australia's Origin Energy, which fended off a hostile takeover attempt from the UK's BG Group last year.
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