New Zealand:

Mighty River Posts 9 Per Cent Profit Lift (The Dominion Post)

Mighty River Power, the  New Zealand state owned energy company which is expected to be floated later this year, has reported a 9 % increase in its first half profits and increased its profit guidance for the full year.

Chairwoman Joan Withers said ''This reflects the benefit of our geothermal base-load capacity, complemented by relatively favourable hydrology in the Waikato River catchment in contrast to poor South Island hydrology. These factors have enabled us to increase production and increase sales into new channels in response to elevated prices in the wholesale market.'' 

The company, which owns the hydro stations on the Waikato River and is the dominant retailer in Auckland through the Mercury Energy brand, reported operating earnings of $254.5 million for the six months to December 31, an increase of 9 per cent.

Mighty River also increased its interim dividend to the New Zealand government, by 16 per cent to $74.8 million.

The government has said it will sell down its ownership of Mighty River from 100 per cent to no less than 51 per cent some time in the third quarter of this year, the first of a series of floats of state-owned companies.

Chairwoman Joan Withers said the financial results were driven by a diverse portfolio ''with pricing and market-share gains in generation and customer sales in a no-growth market''.

Mighty River's net profit for the period was $17.6m, a fall of 81 per cent on a year earlier, however the drop reflects an accounting adjustment related to the fall in long term interest rates, which has also eliminated the profits at other state-owned utilities such as Meridian and Transpower.

The company also said it was on track to make more profit for the full year, in part related to the lack of rainfall in the South Island, which has pushed up wholesale prices.

Withers said the current outlook was for full-year earnings operating earnings of $460m-$475m, around $30m more than it previously expected.

''This reflects the benefit of our geothermal base-load capacity, complemented by relatively favourable hydrology in the Waikato River catchment in contrast to poor South Island hydrology. These factors have enabled us to increase production and increase sales into new channels in response to elevated prices in the wholesale market,'' Withers said.