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Transpower announces half-year results

Transpower today released its financial results for the six months ending December 31, 2023.

– Operating revenue increased by 4% to $465 million (2022: $448 million).

– Operating expenses were $186 million, a 12% increase from the previous period (2022: $166 million), primarily due to higher maintenance costs from price increases, ongoing Cyclone Gabrielle remediation work and higher resourcing costs.

– Net profit after tax was $68 million, a 6% increase from the previous period (2022: $64 million), primarily due to lower dismantling costs.

– Capital expenditure was $199 million, a 15% increase from the previous period (2022: $173 million), in line with Transpower’s approved capital programme.

– The Board has declared an interim dividend of 4 cents/share or $44 million, representing 40% of the expected full-year dividend forecast in Transpower’s 2023/24 Statement of Corporate Intent (SCI).

Transpower Chair Dr Keith Turner said the Board is pleased with the stable first half results for the 2024 financial year both in terms of performance and returns to shareholders.

“The company has maintained its financial performance despite ongoing supply chain disruptions, higher maintenance and resourcing costs, and the ongoing impacts of Cyclone Gabrielle.

“Despite challenges, we are on track to achieve our targets set out in the SCI other than HVAC availability, which is predominantly related to cable fault repairs in Auckland.”

Last December, the Commerce Commission released its 2023 Input Methodology decision, confirming Transpower’s regulated asset base will be inflation indexed from its fourth regulatory control period (RCP4). The Board notes that this decision will materially reduce the revenue that Transpower will derive over the next ten to fifteen years.

“This decision comes at a time when the Board is considering the necessary funding for the level of investment required to accommodate increased electrification.”

The final outcome of its submission to the Commerce Commission for funding for Transpower’s 2025 to 2030 work programme will not be known until closer to the end of 2024, but it is likely that the combination of reduced revenue and increased investment expectations from 2025 onwards will require consideration of the level of dividend that the company can sustain. For the current year, the Board has elected to declare an interim dividend in line with its SCI, given the stable half-year result.

Transpower submitted its RCP4 proposal to the Commerce Commission in November 2023, setting out its vision for the national grid between 2025 and 2030.

“We are forecasting capital expenditure of $2.25 billion across 2025 to 2030, up 32% from our current five-year period. We are beginning a period of intensified work on the grid over the next 10 to 15 years to replace or upgrade existing assets for better resilience as they come to end-of-life, as well as additional work to harden the grid and increase its capacity to address new generation, load, and demand.”

This work is critical to ensuring New Zealanders continue to have a safe and reliable national grid. It’s also an essential foundation for future enhancements to the grid to support electrification and Aotearoa’s transition to a net zero carbon future.

“As we enter a period of strong electricity demand growth, we remain on track to ensure we continue to be a modern and efficient national grid operator, focused on empowering the energy future for New Zealand.”

 

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