S&P rating remains unchanged on Contact Energy after fiscal 2007 results
Standard & Poor’s Ratings Services said that its ratings and outlook on Contact Energy (Contact; BBB/Stable/A-2) remain unchanged after Contact’s fiscal 2007 financial results, which were consistent with its expectations.
As anticipated, low wholesale electricity prices, escalating gas prices, and high costs related to electricity transmission were the main factors affecting the results.
The stable outlook reflects Contact Energy's diversified generation portfolio, its comfort in the company’s gas-contract position in the medium term, and an expectation that Contact Energy’s cash-flow protection metrics would be maintained at a level commensurate with the rating, even during the execution of its planned NZ$2bn renewable-generation capital works.
Contact Energy’s continuing strong results reflect the vertically integrated nature of its business and the company’s solid market position as one of New Zealand’s large energy retailers.
Contact Energy’s planned NZ$2bn renewable-energy generation projects over the medium-to-long term and its associated debt management remain the main credit factors going forward. Further clarity regarding size and timing of its renewable-generation plans is expected later in the year.
Contact Energy’s adjusted net profit of NZ$231.2m (NZ$543.7m EBITDAF) for the year ended June 30, 2007 represents a 4% decrease on the year-earlier result.
Adjusted profit excludes the gain in fair value of financial instruments (NZ$15.5m) and a one-off tax charge resulting from the change in corporate tax rate (NZ$7.1m). In fiscal 2007, average wholesale prices were 42% low, average gas prices were up 20% due to continuing depletion of Contact Energy’s entitlements of low-cost Maui gas contracts and transmission related costs rose by 6.7%.
29-Aug-2007