Vector 1st Half Profit Falls, Makes Dividend Growth Pledge
By David Winning
SYDNEY--Energy infrastructure company Vector Ltd. (VCT.NZ) reported a 25% fall in half-year net profit, but stuck with its full-year outlook despite slower-than-expected growth in its technology business.
Vector, which has been investing in new technologies from smart meters to charging stations for electric vehicles, said its net profit totaled 78.3 million New Zealand dollars (US$56.7 million) in the six months through December.
That was down from NZ$104.4 million at the corresponding stage a year earlier, and reflected a big increase in depreciation and amortization in the just-ended half and no repeat of one-off items totalling NZ$18.8 million that impacted last year's result.
Adjusted earnings before interest, tax, depreciation and amortization--Vector's preferred measure of its financial performance--from continuing operations fell by 2.7% to NZ$250.0 million in the half-year period. Revenue rose by 8% to NZ$676.2 million, driven largely by its acquisition of E-Co Products Group.
Vector has been increasing customer connections in its energy businesses, helping to offset the impact of falling electricity consumption per household.
The company said last month that new connections in its electricity business rose by 1.2% in the six months through December, lifting its customer base to 559,777 from 552,948 a year earlier.
In its gas distribution business, new connections increased by 2.2% in the six-month period. That resulted in Vector having 108,270 distribution customers at the end of December.
Vector has been actively seeking new investment opportunities, including overseas, and potentially with partners. In October, the company said it had agreed to a deal with EnergyAustralia to provide smart metering in Australia over three years, building on earlier deals with local retailers. The company has also been working with Tesla Inc. on the possible introduction of new battery storage technology in New Zealand.
While earnings in Vector's technology business grew by NZ$4.2 million in the half-year period, growth was lower than management expected. That largely reflected the slow rollout of smart meters in Australia, an unexpectedly poor performance by E-Co Products' heat-pump business, and costs tied to the establishing of HRV Solar ahead of its launch in Auckland.
"In addition, there was increased planned and unplanned maintenance costs in our Regulated Networks business to accommodate Auckland's continued rapid growth as well as the increased need to manage the vegetation risks to energy infrastructure," said Chairman Michael Stiassny.
Directors of the company declared an interim dividend of 8.25 New Zealand cents a share, up from a payout of 8 New Zealand cents a year earlier.
"Vector will increase dividends by at least 0.25 cents per share annually provided the company has the financial capacity to do so," Mr. Stiassny said. "We will review this policy once the parameters for the 2020 electricity reset are established."
He also reaffirmed guidance for annual adjusted ebitda to be broadly flat compared to the 2017 fiscal year.
-Write to David Winning at email@example.com
(END) Dow Jones Newswires
February 27, 2018 15:20 ET (20:20 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.