Strong result for power company

Ruapehu Bulletin, Volume 13, Issue 638, 28 May 1996, Page 6

Strong result for power company

Powerco Limited last week announced a net profit after tax of $8.2 million for the year ended 31 March 1 996, a strong result for the newly merged company. The company supplies energy to customers in Wanganui and Taranaki as well as Raetihi and other parts of the Waimarino, and Waiouru. Powerco Chairman Peter Warnock said the result included six months of trading from Taranaki Energy and a full year's trading from Powerco of Wanganui. If the result had been for a full 12 months of trading from both companies, the net operating profit would have exceeded the $12 million forecast at the time of the merger. During the 12 months the company wrote off goodwill associated with the purchase of the Hawera Gas Company Limited, provided for retirement gratuities, and incurred restructuring costs. Mr Warnock said these were all one-off costs which strengthened the company's ability to pursue its long term goal of becoming a significant regional energy supplier. Mr Warnock said the company would pay a final di vidend for the year of 18.5 cents per share on 9 August, which equates to a total dividend of $9.6 million. Return on average shareholder's funds last year was 7.7%. Though this was an above average return for a New Zealand electricity company, he said Powerco was committed to achieving a much better commercial return over the next few years. The merged Powerco was no w the sixth largest distributor of electricity in New Zealand holding about 4.5% of the New Zealand electricity network market. "The merger has seen major efficiency improvements within the organisation as a result of restructuring and cost reductions, while at the same time improving our customer service levels," he said. The Company was on track to exceed cost savings of $2.4 million a year in its third year of operation, as predicted in joint merger analysis conducted by Powerco Wanganui and Taranaki Energy last year.

He said a steady increase demand for energy services also contributed to the result. Total energy revenues were $74.5 million. This would have equated to about $ 1 14.5 million had Taranaki Energy been part of the company for the full year. Approximately 859 GWh of electricity was moved through Powerco' s networks in the year to 31 March, reflecting an estimated 1.5% increase in demand. The company's hydro generating stations at Mangorei, Motukawa and Raetihi produced 5 1 .3 GWh of electricity in total in the year ended 3 1 March. This was ahead of total generation for these three stations in the previous year. Mr Warnock said Powerco will continue to develop links with neighbouring power companies. "In the deregulated energy sector, standing still is not an option. Powerco will be proacti ve and look for opportunities to merge with or form strategic alliances with other energy companies in the region."