Meridian ready for share offer
By Pattrick Smellie
Meridian Energy says it's ready for partial privatisation and expects a significant uplift in operating earnings in the second half after transmission outages and heavy rainfall knocked its financial performance.
The state-owned power company's accounts for the six months to December 31 also show a strong positive bounce in the unrealised value of its contracts to service the Bluff aluminium smelter, where the majority owner Rio Tinto is pressing to renegotiate a new long term contract.
The $102.1 million improvement in the unrealised value of financial instruments was the primary factor pushing Meridian to a net profit of $173.3 million in the first half, up by $164.1 million on the same period a year earlier.
Earnings before interest, tax, depreciation, amortisation and movements in the value of financial instruments showed a 6 percent decline to $277.1 million.
Underlying profit, an internally produced measure of earnings that smooths out large abnormal items, was $88.3 million, an 11 percent fall on the previous six months, chief executive Mark Binns said.
Revenue for the first half was down 2 percent at $1.19 billion, reflecting falling wholesale prices and weak commercial and industrial demand for electricity.
Wholesale electricity prices fell, while a large number of transmission system outages relating to the commissioning of the new Pole 3 Cook Strait cable also hit first half earnings.
"Operationally, we're in good shape and we're building resilience against New Zealand's medium term flat demand outlook," Mr Binns said.
Mr Binns offered no update on the progress of negotiations with Rio Tinto, which is seeking to sell the smelter along with other plants in Australia.