Trustpower's result falls below expectations in drought year

Friday 1st June 2001

By Campbell McIlroy

This year's severe drought cost Trustpower about $5 million as the electricity generator had to pay higher wholesale rates to make up for lower than expected output.

Trustpower yesterday announced an after-tax surplus of $23.5 million.

The 12.5% drop on last year's result was also below market expectations.

The company's power-generation schemes could produce up to 1750GWh of electricity in a normal year but this summer's drought meant only 1612.5GWh were produced.

As a result of the shortfall the company had to spend about $5 million buying an extra 137GWh from external sources.

On the positive side analysts said the company had performed very well in securing new customers. The company's result announcement said Trustpower had achieved a net gain of 46,000 new customers taking the year-end total to 266,000.

A further 14,000 customers have been added to the company's books since March 31.

However, the significant increase in customer numbers resulted in an expense item of $6.4 million before tax, compared with $900,000 in 2000, from marketing initiatives to attract new customers. Directors said the average cost of $115 for each new customer compared well with the up to $800 a customer incurred by some of its competitors.

The company's generation assets were also valued up at year's end by $34.5 million which the directors put down to enhancement work and in some cases the attractive purchase prices of newly acquired schemes.

Directors announced a final dividend of 8c with no imputation credits would be paid on August 31, bringing the total dividend for the year to 17.206c a share, compared with 16.5142c a share last year.

Directors said continuing drought conditions in the South Island was likely to adversely affect the early part of the 2002 financial year.

But shareholders could continue to expect added value over the medium- to longer-term thanks to the company's underlying strength provided by its portfolio of generation assets using renewable energy sources.

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