Revenue for the half year to December for Vector Ltd (NZX: VCT) was up to $676.2 million from the previous comparative result of $625.6 M, due primarily to the acquisition of E-Co Products Group last March.
Vector’s chairman Michael Stiassny and chief executive Simon Mackenzie said told shareholders, however, that group net profit was down to $79 M from $107.1 M in the prior period.
This was largely because of one-off items totalling $18.8 M in the prior year, as well as a significant increase in depreciation and amortisation in the latest half.
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) were down to $250.0 M from $257.0 M in the prior period. Regulated Business earnings were down $3 M largely due to an increase in maintenance expenditure.
They said Vector’s financial results reflect the long-term investment in new energy future initiatives and the impact of Auckland growth on connections and capital expenditure.
“We believe the business is well positioned for the future. However, we were not satisfied with the slower than expected growth in our technology part of the business.
“In particular, this was attributable to disappointing results in the E-Co Products Group’s heat pump business, as well as the cost of establishing the new HRV Solar business ahead of its recent launch in Auckland.”
In metering, installations in Australia were lower than hoped for as the market waited for the Power of Choice reforms to take effect in December 2017.
In addition, there were increased planned and unplanned maintenance costs in Vector’s regulated networks business to accommodate Auckland’s continued rapid growth as well as the increased need to manage the vegetation risks to energy infrastructure.
Stiassny and Mackenzie said all these areas will be a key focus for the second half of the financial year. Gas Trading earnings were down $5.3 M, because of a $5.3 M insurance settlement one-off in the prior year, with underlying earnings flat.
While earnings in the technology segment grew $4.2 M and helped offset the earnings decline in regulated networks and gas trading, growth was lower than expected.
Vector said according to the International Renewable Energy Agency (IRENA), that by 2020 all the renewable power generation technologies now in commercial use will fall within the fossil fuel-fired cost range - with most at the lower end or even undercutting the cost of fossil fuels.