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Highlights
- Trustpower provided its operational update on Tuesday.
- The Group is likely to settle its retail business sale with Mercury in Q2 of 2022.
- TPW narrowed its EBITDAF guidance range to $205 million-$220 million for FY22 from an earlier range of $210 million-$225 million.
Trustpower Limited (NZX:TPW), an NZ-based electricity retail and generation company, provided its operational update on Tuesday. The Group notified that the operational activities that were needed to split the retail business from retained operations were on track and the transaction was likely to be settled with Mercury in Q2 of 2022.
Key sale conditions of approval from Commerce Commission and shareholders have been fulfilled with the only condition of a restructure of major shareholder -- the Tauranga Energy Consumer Trust (TECT) -- pending.
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TPW had informed that it would sell its retail business to Mercury NZ in June 2021 in a conditional transaction valued at $441 million. The Group’s retail business sells gas, electricity, telecom services to nearly 231K customers across NZ. After the sale, the combined business would have nearly 780K customers across energy and telco services.
Trustpower stated that its main retail metrics that included fibre and mobile connections, products per customer, and digital uptake showed encouraging impetus despite COVID-19-induced interruptions.
Trustpower to be renamed Manawa Energy after sale
Trustpower will change its name to Manawa Energy after the sale gets completed. Manawa Energy’s focus will be on the future with clear growth and agenda. It would aim to influence the anticipated 50%-70% demand growth over the next 30 years from the electrification of transport and industry.
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Manawa’s revenues are relatively protected from a high inflationary atmosphere as most are connected to wholesale energy pricing.
Operating costs and capital expenditure are expected to come under inflationary pressure. Manawa has already agreed on large short-medium term projects and has moderate buying power. Its focus on operating efficiency can help in offsetting pressures.
Downward strain on earnings
Trustpower narrowed its EBITDAF guidance range to $205 million-$220 million for FY22, down from the previous guidance range of $210 million-$225 million. The lower guidance is due to various market, hydrological, and other factors that have led to downward pressure on earnings.
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A dry January weather, an outage at the Waipori scheme witnessing delays in return-to service and the prevalence of low wind volumes and hydro inflows coinciding with high prices have forced TPW to lower guidance ranges.
On 15 February, at the time of writing, TPW was trading at $6.96, down 0.71%.
(NOTE: Currency is reported in NZ Dollar unless stated otherwise)
