Vector raises its forecast for full-year earnings as it eyes growth in Auckland

Tuesday, 23 February 2021

Lines company Vector has increased its forecast for full-year profit.

Auckland electricity lines company Vector raised its full-year profit forecast, as it eyes growth in our biggest city.

On Tuesday, Vector raised its expectation for adjusted pre-tax profit to a range of $500 million to $520m in the year to the end of June, from its earlier forecast of $480m to $500m. In the first half, profit on that measure rose 3.5 per cent to $273.8m.

Vector expects growth in Auckland to continue, and is targeting to add about 15,000 new electricity connections this financial year. In the first half, its new connections were 15.5 per cent higher than the same period the previous year at 9804, with 7777 of those for electricity and 2027 for gas.

However the company noted that the growth means it is spending more. “Connections and infrastructure activity remain elevated, necessitating significant capital expenditure,” it said in an investor presentation.

* SkyPath would allow Auckland commuter to swap scooter for bike

* Technological changes disrupting the energy sector: Vector

Net profit in the first half rose 26.8 per cent to $102.1m.

The bulk of the company’s profits come from its regulated networks business, which increased profit 6.7 per cent to $180.7m in the first half.

Profit at its gas trading business fell 29 per cent to $8.5m after it sold its Kapuni assets to Todd Energy in March 2020. Its metering business lifted profit 5.4 per cent to $38.7m and the company said its deployment of advanced meters across New Zealand and Australia is on track.

Vector will pay a first-half dividend of 8.25 cents a share on April 8. The first-half dividend has remained at that level for the past four years.

The company is 75 per cent owned by the Auckland community trust Entrust.

Shares in Vector slid 1 per cent to $4.18 in mid-morning trading.