MRP
23/02/2016 08:36
HALFYR
PRICE SENSITIVE
REL: 0836 HRS Mighty River Power Limited (NS)
HALFYR: MRP: Mighty River Power HY2016 Results and Interim Report
Strong operating performance confirms interim dividend
Mighty River Power today announced steady operating earnings (EBITDAF) of
$257 million for the six months ended 31 December 2015, supported by a strong
operating performance and successful customer loyalty initiatives.
The Company has declared an interim dividend of a fully-imputed 5.7 cents per
share, up 2%, to be paid to Mighty River Power's 95,000 owners on 31 March.
Chief Executive, Fraser Whineray, said pricing and competitive pressure
remained intense during the period, in a market that is among the most
competitive in the world1. National electricity demand has continued to lift
(up 1.4% on the prior period) and the broader industry dynamic is positive
with an improvement in ASX electricity futures prices.
Highlights in the first half included increasing Mercury customer
satisfaction and increased output from geothermal generation. Safety
performance also improved with a reduction to one lost-time injury during the
period, although above the Company's goal of 'zero-harm'.
Other significant milestones included the closure of the Southdown gas-fired
power station in Auckland from 31 December. "We have now gone beyond 100%
renewable electricity with our recent move into solar," he said.
EBITDAF of $257 million was down $1 million on the prior period, with
increases in hydro production (up 26%) and geothermal (up 5%) offset by lower
generation yields, reflecting subdued wholesale electricity prices, and
competitive pressure on energy pricing to residential and business customers.
Net profit after tax (NPAT) of $74 million compares with $8 million in the
prior period, with the difference due to lower non-cash impairments. The
Company recognised an additional impairment of $18 million, which includes
the permanent sealing of exploratory geothermal wells in Chile, along with a
partial impairment reversal of $1 million from the closure of Southdown.
The competitive market was also reflected in higher operating costs (up $7
million), as the Company invested more intensively during the first half of
the financial year in brand promotions and loyalty initiatives.
These included growth in the pre-pay segment with GLOBUG and the introduction
of free Good Energy Days that had a measured positive impact on customer
satisfaction.
Mr Whineray said Mercury's social media community was the largest in the
sector and the number of customers engaging with the Company's brands though
digital channels continued to increase through the half year. At the same
time, the proportion of customers rating as 'highly satisfied' has climbed
above 65%, with the Company targeting further improvement in this measure.
Along with the Company's focus on customers, Mighty River Power Chair, Joan
Withers, said the Board was pleased to be reporting progress on key strategic
initiatives. These included the final stages of the exit from international
geothermal development (announced in December 2014), the planned closure of
Southdown (announced in March 2015) and the addition of solar capability.
"Our strategy centres on keeping a sharp focus on running the business well,
our investment priorities and on evolving our Company for the future -
through operational fitness, service innovation and in shaping new customer
offerings."
Mr Whineray said the purchase of the well-established solar business, What
Power Crisis (WPC), would add proven expertise in the growing niche of solar
power. WPC also has a track record in the Pacific, delivering both on and off
grid solutions with storage, including the Fred Hollows Foundation Eye
Hospital in the Solomon Islands, along with showcase commercial projects in
New Zealand for the Auckland Museum and Air New Zealand.
"With plug-in electric vehicle numbers on New Zealand roads recently
accelerating past 1,000, and a four-fold expansion of solar since 2014,
people are changing their approach to energy. New Zealand's renewable energy
foundations were acknowledged in the weight of submissions last year for the
country's Climate Change target, strongly highlighting the importance of
action on the electrification of transport."
DIVIDEND AND GUIDANCE
Hydrology in the Waikato River catchment was below average through HY2016,
with the drier conditions leading to a reduction in forecast full-year hydro
production of 150 GWh, worth almost $11 million, to 4,000 GWh.
Mrs Withers said hydrology alone could shift EBITDAF 10%, so based on many
years of experience the Company expected guidance to move during the year,
possibly several times, as part of business as usual.
Full year EBITDAF is now expected to be in the range of $480 million to $500
million (previous guidance being $490 million to $515 million range) subject
to any material adverse events, significant one-off expenses or other
unforeseeable circumstances including hydrological conditions. This assumes
average inflows through to 30 June 2016.
The FY2016 ordinary dividend guidance is unchanged at 14.3 cents per share.
Mrs Withers said it was pleasing to have ratings agency Standard & Poor's
confirm Mighty River Power's corporate credit rating as BBB+/Stable in
December. The Company targets an investment grade long-term credit rating of
BBB+ as part of a prudent and sustainable capital structure. The Company
receives a one-notch uplift from its stand-alone rating of 'bbb', reflecting
the majority ownership of the Crown.
1. Source: Accenture - The New Energy Consumer 2015.
Attached are the following documents in relation to Mighty River Power's
financial results for the six months ended 31 December 2015:
-NZX Appendix 1
-News Release
-Financial Commentary
-Results Presentation
-2016 Interim Report including unaudited financial statements for the six
months ended 31 December 2015 and Auditor's Review Report
-NZX Appendix 7
ENDS
For further information:
David Glendining
Head of Communications
T 0272 105 337
Tim Thompson
Investor Relations/Treasury
T 0275 173 470
End CA:00278118 For:MRP Type:HALFYR Time:2016-02-23 08:36:47
