Swings and roundabouts in reporting
AUCKLAND: Meridian Energy says its net profit gained 19% in the six months to December to $315 million thanks to positive changes in the value of its hedging arrangements.
At an operating level, its earnings fell by 9% to $422 million due to lower hydro generation in New Zealand and lower market prices in Australia.
Separately, Meridian said it would soon begin construction of a new $395 million wind farm in Hawke’s Bay.
Harapaki will be New Zealand’s secondlargest wind farm with 41 turbines generating 176MW of renewable energy, enough to power more than 70,000 average households.
In its result, chief executive Neal Barclay said Meridian’s performance partly reflected less than favourable conditions compared to the previous year.
Overall, hydro generation volumes were down 7% due to lower starting storage and lower inflows since October 2020.
‘‘Generation volume and price volatility area feature of New Zealand’s hydrobased renewable electricity system . . . we were particularly pleased that the strength of the Meridian and Powershop brands continued to shine through,’’ he said.
Customer numbers across New Zealand and Australia now exceeded half a million and had grown 3% since June 2020.
Meridian declared a 5.7c interim dividend, unchanged from the previous corresponding period.
Spark
Spark reported an 11.4% fall in net profit after tax to $148 million for the six months to December 30, while revenue fell 1.5% to $1.77 billion.
The telco blamed Covid19 for the revenue fall. Border closures and tightening choked off an estimated $114 million in annual roaming revenue for Spark, Vodafone and 2degrees from Kiwis travelling overseas, and incoming tourists.
In an NZX filing, Spark said it lost about $26 million in ‘‘highmargin mobile roaming revenue due to ongoing travel restrictions and border closures.’’
The telco said its lowermargin prepay mobile business was hit by net migration falling about 44,000 versus the first half of FY2020.
Overall, mobile service revenue fell 1.2% to $420 million but Spark said underlying performance was strong. After stripping out the impact of the loss of roaming, mobile service, revenue was up 3.8%.
Sky
Sky has reported a 234% jump in net profit to $39.6 million for the six months to December 30 on the back of an 80% spike in its streaming business, which includes Neon, Sky Sport Now and RugbyPass, a stabilisation of its satellite business and costcutting.
Streamers continue to spend less than satellite customers, however, and revenue fell 7% to $356.9 million.
Total customers jumped from 794,000 a year ago to 927,000 as Sky box numbers slipped 4% versus the yearago half but streaming customers jumped from 196,000 to 352,000.
Sky’s total subscriber numbers bulged to 990,000 in June 2020 as it brought on 154,000 streamers with its acquisition of Spark’s Lightbox, which was merged with Neon.
The lower spending by streamers meant Sky’s 80% jump in streaming revenue equated to relatively modest $11 million rise (from the yearago $25 million to $36 million for the first half of 2021). Ebitda increased 30% to $116.3 million.
PGG Wrightson
Rural services group PGG Wrightson (PGW) said its net profit leapt 41% in the first half to $18 million, driven by strong performances from its retail, livestock and real estate businesses.
The company announced a fully imputed 12c dividend, up from 9c in the previous interim result.
The company shares rallied by 14c, or 4.1%, to $3.50 following the result.
PGW’s operating EBITDA came to $42.1 million in the six months to December, up 21%, and the company said it was on track to achieve its fullyear EBITDA guidance of about $57 million.
Chairman Rodger Finlay said PGW had executed its strategy to drive consistent performance and growth.
‘‘Our focus remains on serving and adding value to our customers’ businesses by supplying onfarm and grower solutions together with leading technical advice,’’ he said.
‘‘We are seeing the results of our continued investment in the business and our customers are also benefiting from the enhancements in the PGW Group offering,’’ he said.
‘‘These initiatives, along with the investment we are making in R&D enable us to bring new technically proven products and solutions to the New Zealand primary sector and demonstrates our commitment to innovation and the bright future of the primary sector.’’
Chief executive Stephen Guerin said the first six months of the 2021 financial year provided a very good start with all business units within retail and water trading ahead of the corresponding period last year.
Operating EBITDA for this group was $35.8 million (up 15%) and revenue was $413.4 million (up 8%).
Summerset Group
Retirement village owneroperator Summerset Group pushed up its bottom line profit 32% but underlying profit fell 7% when the company spent more during the pandemic.
Net profit after tax, which includes unrealised property revaluations, rose 32% to $230.8 million but fullyear underlying profit was $98.3 million. The bottom line uplift was driven by major revaluation rises of $221.1 million.
Chief executive Julian Cook said Summerset had a strong year, despite the pandemic.
‘‘Summerset has maintained strong profitability and resilience throughout 2020,’’ he said.
Expenditure on measures to keep residents safe from Covid increases in employee wages resulted in the underlying profit falling, he said.
The business developed 356 residences or units on nine sites despite the fiveweek construction shut down starting last March.
Summerset has 32 villages completed or under development. It claims to have the largest land bank in the sector.
Summerset now accommodates 6200 people, up from the previous year’s 5500 people.
Mercury
Power generator and retailer Mercury raised its firsthalf profit and dividend but said the dry weather would affect its annual earnings.
The company’s operating earnings (EBITDAF) for the six months to December 31 were $294 million, up $36 million, driven by higher energy margins, additional trading profits and cost control, but partially offset by a 108GWh fall in overall generation.
The net profit was up $47 million to $130 million due mostly to higher EBITDAF and Mercury’s gain on sale recognised from the sale of its interest in Hudson Ranch 1 and its geothermal power station in California, which netted about $40 million.
Mercury declared a fully imputed interim dividend of 6.8c per share, up 6% on the halfyear 2020 dividend.
The company now expects its fullyear EBITDAF to come in at about $520 million, down from an earlier forecast of $535 million.
‘‘This reflects an expected 100GWh decrease in fullyear hydro generation to 3800GWh due to dry weather in the Taupo catchment since midJanuary and ASX electricity futures indicating wholesale prices will remain elevated for the remainder of the financial year,’’ Mercury said.
Mercury revised capital expenditure to $70 million from $80 million and said it would maintain its final dividend guidance of 17.0c per share.
Heartland Group
Financial services firm Heartland Group Holdings lifted firsthalf net profit 10.6% but declared a slightly lower interim dividend due to restrictions imposed by the Reserve Bank.
The company, which operates Heartland Bank in New Zealand and a reverse mortgage business in Australia, posted a net profit of $44.1 million in the six months ended December, up from $39.9 million for the previous corresponding period.
After stripping out oneoff items, the underlying net profit was $43.2 million, up 13.4%.
Heartland declared an interim dividend of 4c per share, down from 4.5c due to RBNZ restrictions on distributions by banks in NZ but said it expects to return to a payout ratio in line with historic levels once those restrictions were removed.
The company issued guidance for a fullyear profit of $83 million to $85 million, saying it expected it to come in at the upper end of that range.
Heartland shares dipped 1c to $1.88 in morning trading yesterday.
In its results presentation, the company said the first half result exceeded expectations, particularly due to a much lower than forecast impaired asset expense and continued growth in core portfolios.
Chorus
Chorus blamed the pandemic’s effect on immigration for a profit and revenue fall in its first half — although its firsthalf report came on a day when Vodafone was continuing to ramp up pressure in fixedwireless, where it and Spark were peeling away customers.
While strong housing growth was fuelling increased demand for fibre installations, Covid19’s effect on net migration into the country has softened demand on overall broadband connections, chief executive JB Rousselot said.
While Chorus was able to keep UFB fibre running smoothly for retailers like Spark, Vodafone, 2degrees and Vocus during lockdowns, as the workfromhome boom saw broadband spike, the overall softening in demand, pinned on immigration, had net profit after tax fall from $31 million in the first half of 2020 to $24 million.
CFO David Collins also blamed the Auckland lockdowns, which hit new connection activity, for the dip. However, the direct impact cost of Covid to Chorus, initially put at $10 million, was now estimated at $6 million to $7 million.
Revenue fell from $483 million to $473 million. Ebitda eased from $332 million to $323 million.
A 10.4c per share dividend was declared for the first half. The company reiterated its fullyear dividend guidance of 25cps.
Chorus said its fullyear ebitda guidance was unchanged at $640 million to $660 million but that it was tracking to the lower half of that range.
Tower Insurance
Insurer Tower said it intended to pay a dividend in May — the first time the company would do so since March 2016.
Blair Turnbull, Tower chief executive, announced to the stock exchange this week before its annual general meeting that it hoped to begin paying shareholders again with an indicative interim dividend of 2.5c per share, due to be confirmed at its halfyear results.
Mr Turnbull also confirmed there would be no change to its fullyear 2021 profit guidance of at least a 5 % improvement on its 2020 underlying net profit of $28.5 million.
He said a focus on creating a more agile and digital business model had helped the company weather large events in the first four months of the financial year, while still maintaining a focus on growth and innovation. — The New Zealand Herald