State-owned national electricity grid operator Transpower returned to a first-half profit after taking a smaller unrealised hit on its financial instruments than a year earlier, and its earnings margins are tracking ahead of its annual target.
The Wellington-based company made a profit of $70.7 million in the six months ended Dec. 31 from a loss of $51.5 million a year earlier, it said in a statement. Stripping out unrealised movements in its financial instruments, earnings climbed 45 percent to $111.5 million, and revenue gained 20 percent to $453.2 million.
Earnings before interest, tax, depreciation, amortisation and changes in the fair value of financial instruments climbed 45 percent to $155.3 million in the period. That margin of earnings rose 5.8 percentage points to 69.2 percent, and is tracking ahead of the 66.3 percent margin budgeted for in Transpower’s latest statement of corporate intent.
“The increase was primarily due to transmission grid upgrading investment resulting in an increase in transmission revenue,” the company said.
The state-owned enterprise, which isn’t one slated for a selldown by the government, will pay an interim dividend of $92 million, down from $110 million a year earlier after a capital structure review. Transpower is targeting an annual return to the Crown of $229 million.
The company is facing a radical overhaul of how it can set its transmission prices, after the Electricity Authority last year outlined its new approach on how best to charge for that national grid in a bid to share out the costs of national electricity transmission at a lower overall cost than under the current regime.
Chairman Mark Verbiest said Transpower has the HVDC Pole3 upgrade and North Auckland and Northland grid upgrade due for commissioning this calendar year, having commissioned the North Island upgrade in October last year.
“These projects will result in a more reliable and resilient grid for New Zealanders,” Verbiest said. “Although our programme of major capital investments is nearing completion, we will continue to implement a range of small to medium sized projects to maintain the reliability and resilience of the grid.”