4 NZX profit-powered utilities in focus ahead of fixed charges hike

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4 NZX profit-powered utilities in focus ahead of fixed charges hike

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 4 NZX profit-powered utilities in focus ahead of fixed charges hike
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Highlights 

  • Power utilities of NZ delivered a strong H2 2021 as households are set to see higher daily fixed charges from April.
  • On Monday, Contact Energy's share price was down by 1.2%, while Meridian Energy's share price was up by 0.95%.
  • Genesis Energy’s share price was up 0.72% at $2.8 on Wednesday.

 

Power utilities of NZ delivered a power-packed performance in the second half of 2021. Strong results have come at a time when households are set to see higher daily fixed charges from April.

Fixed daily charges on Kiwis’ power bills would be doubling from April. The charges will increase from 34.5 cents for a day to 69 cents as the government decided in September to discontinue the obligation for power firms to provide low-user tariffs over a period of 5 years.

On this note, let’s skim through the performance of these 4 NZX power utilities.

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Contact Energy Limited (NZX:CENASX:CEN)

Contact reported robust financial results in H2 FY22, registering a 72% and 31% rise to $134 million and $322 million in statutory profit and operating earnings, respectively, for the period. CEN delivered profits due to strong hydro generation and increased sales to competitors.

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CEN is due to pay an interim dividend of 14cps on 30 March 2022. The Group was dedicated to leading the decarbonisation of NZ.

On Wednesday, Contact Energy’s share price was down by 1.2% at $8.25.

Meridian Energy Limited (NZX:MELASX:MEZ)

Meridian delivered an NPAT of $145 million for the 6 months ended 31 December 2021 and an 8% growth in electricity sales volumes for the period. The Group also completed the sale of MEA on 31 January 2022 for AU$740 million.

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The Group declared an interim dividend of 5.85 cps that will be paid on 8 April 2022. MEL expects NZ capex to be between $165 million and $175 million for FY22.

On Wednesday, Meridian Energy share price was up by 0.95% at $5.3.

Mercury NZ Limited (NZX:MCY)

Mercury delivered an NPAT of $427 million, up $297 million on pcp because of gains made on the sale of Mercury’s shareholding in Tilt Renewables. The sale of Tilt stake, Norske Skog contract and Turitea North wind farm reaching full capacity helped MCY in delivering string H2 FY22 results.

MCY will pay an interim dividend of 8cps on 1 April 2022. Mercury expects EBITDA to be at $570 million and dividend guidance at 20cps for FY22.

MCY ended the day 1.39% in green to close at $5.84.

Genesis Energy Limited (NZX:GNEASX:GNE)

Genesis notified on 1 March that it was providing up to $75 million of fixed rate green bonds of 6 years to NZ retail investors and institutional investors. The offer is from 1 March to 4 March and the indicative margin range for green bonds is 1.05% to 1.20% p.a.

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Genesis delivered a strong HY22 and expects EBITDAF to be $430-$440 million for FY22.

GNE ended the day 0.72% in green to close at $2.8.

Bottom Line

Power firms can raise daily charges by a further 34.5 cents for a day, including GST from 2023 and then again in the following 2 years. The move aims to lower variable power prices paid by households as a result of the rise in daily fixed prices, leaving consumers no worse-off on aggregate.

(NOTE: Currency is reported in NZ Dollar unless stated otherwise)

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