Friday 11 November 2016 09:38 AM
Infratil first-half earnings fall 7.1% as Perth Energy unit struggles
By Paul McBeth
Nov. 11 (BusinessDesk) - Infratil reported a 7.1 percent fall in earnings as the listed infrastructure investor's Perth
Energy division faced difficult retail conditions in Western Australia, and the company now sees its annual result
tracking at the bottom end of its forecast.
Underlying earnings before interest, tax, depreciation, amortisation and fair value of financial instruments (ebitdaf)
fell to $246 million in the six months ended Sept. 30 from $253.1 million a year earlier, the Wellington-based company
said in a statement. Net profit sank 93 percent to $28.9 million, though the year-earlier period included $407.1 million
of gains from the sale of Infratil's stakes in Z Energy and iSite Holdings. It raised its interim dividend to 5.75 cents
per share, payable on Dec. 15 with a Nov. 28 record date, from 5.25 cents a year earlier.
Perth Energy was the biggest drag on earnings, posting an ebitdaf-loss of $9.7 million due to expensive product purchase
arrangements and a lack of wholesale hedging products, which led to "poor performance in the retail business," Infratil
said. The company has installed a "substantially new management team" which is expected to show an improvement in the
second half of the financial year.
Infratil warned annual ebitdaf was tracking at the bottom end of the projected $485 million-to-$525 million range
because of the flat performance from electricity generator and retailer Trustpower, Perth Energy's troubles, the cost of
demerging Tilt Renewables from Trustpower, and the loss of NZ Bus's South Auckland contracts. Offsetting that will be
growth at Wellington International Airport and contributions from newer investments King Country Energy, Canberra Data
Centres, Australia National University student accommodation, and its US renewable business, Longroad.
The company has been on the hunt for new investments after selling out of Z, Lumo and iSite, and recycled some of that
capital into CDC, ANU and Longroad through the six month period. It still has more than $500 million in cash and undrawn
bank facilities and has said it favours renewable energy, the retirement sector, social infrastructure such as housing,
telecommunications infrastructure, and waste management.
Capital expenditure was $103.5 million and Infratil spent $496.3 million in new investments in the half, up from $62.4
million a year earlier. It's projecting capital expenditure and investment of between $700 million and $750 million for
the full year, up from $599.8 million in 2016.
The shares last traded at $2.945, having declined 10 percent so far this year, and Infratil said the discount to
historic highs and its net asset value suggested conservative valuations of Trustpower and Wellington Airport and that
CDC and ANU were held at a discount to cost. It's operating a $50 million share buyback "designed to repurchase shares
at attractive returns and deliver strong accretion in the near term."
Earnings at Trustpower were largely flat at $118.7 million due to weak generation and a higher cost of acquiring
customers, while Tilt Renewables earnings edged up to $66.1 million on higher Australian wind generation. Wellington
airport lifted earnings 4.5 percent to $43.7 million on rising passenger numbers, and NZ Bus earnings rose 10 percent to
$25 million on cheaper petrol costs and greater productivity.
The Metlifecare stake contributed $7.4 million while new investments CDC and ANU contributed $600,000 and $1.5 million
respectively. RetireAustralia earnings fell 32 percent to $7.1 million on weak sales with new developments slated for
the second half
(BusinessDesk)
ends