Exit of international geothermal strategy costly for Mighty River Power
Despite the dire news, the company says that dividends expected for this year will remain unchanged.
Local news from New Zealand detail that Mighty River Power’s withdrawal from its geothermal operations overseas is responsible for a “93 per cent plunge in net profit in the half year to December 31. The power company’s net profit fell from $116 million in the prior comparable period to $8 million.”
Despite the dire news, the company says that dividends expected for this year will remain unchanged at 14 cents per share and maintained strong cash flows, allowing for this dividend payout and also reinforcing that “it was investigating overseas geothermal ventures to spend an estimated $1 billion in surplus cash over the next five years.”
The same source states that Mighty River Power abandoned geothermal development projects in Chile and Germany which resulted “in non-cash impairments ($83 million) along with the favourable fair value movements of $20 million recognised in the previous half year.” ThinkGeoEnergy reported on this in December last year.
“As announced in December, following a rigorous review, we decided to exit international geothermal development options. The accounting implications of that is a key factor flowing through to the financial results for the period,” said chairwoman Joan Withers.
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Source: The NZ Herald