Varied fortunes for Vector
Paul McBeth
Vector posted a 0.3 per cent increase in annual underlying earnings and says next year’s result will be largely the same as t he el ectricity, gas and telecommunications utility continues to branch out from its regulated network business.
Earnings before interest, tax, depreciation and amortisation from continuing operations increased to $474.4 million in the 12 months ended June 30 from $473m a year earlier. Vector has been on the prowl for new revenue streams as its dominant regulated electricity and gas distribution unit faces smaller returns, which has seen it branch out into telecommunications, smart meters, battery storage, solar and home ventilation.
“Vector is a business under pressure through a combination of consumer trends, a low interest rate environment and regulatory settings,” said chairman Michael Stiassny.
“The downward movements in our regulated networks’ financial results may be small, but they are noticeable: electricity connections may be up, but throughput is down; gas volumes are up, but prices are about to be reset down.”
Net profit dropped 38 per cent to $168.9m, although the prior year included a $164m gain on the sale of Vector Gas offset by a $64m impair- ment charge on the value of its gas trading business. Revenue rose 7.2 per cent to $1.23 billion.
The board declared a final dividend of 8c per share, taking the annual return to 16c, up from 15.75c a year earlier.
Stiassny said it was the company’s 11th straight year of hiking the dividend payment, however, the changing trends in energy consumption were disrupting the sector, and Vector’s changes were essential to its survival. “Long-term dividend growth is untenable without a radically different business paradigm,” he said.
Vector is targeting Australia for Year ended June 30 its next tranche of growth in its metering business and said it’s “currently involved in competitive procurement processes with major Australian retailers with a view to securing contracts for deployment from 1 December 2017”.
The company’s technology division boosted earnings 7.9 per cent to $122.5m on a 19 per cent gain in revenue to $214m, which it said was underpinned by the deployment of smart meters on both sides of the Tasman and the acquisition of E-Co Products Group, better known as HRV and EES, and PowerSmart.
—