Contact Energy - CEN Chart

[CAM]

They might lose 5pc of customers but.....

"Contact would still sell all the electricity it generated, about 28 per cent of national output, and the loss of some of its retail base would be taken up by commercial or wholesale clients"

...and wouldn't commercial/wholesale be 'cheaper' customers to have?....would it mean they wouldn't have to buy as much on the spot market? Maybe a reduction in customer base is a good thing for profitability? ....well in the short term until further generation assets are built to service a larger client base.

[Sideshow Bob]

Alot of electicity retailers advertising at present.............

[BDLBOM]

Has there been any speculation of late about another takeover bid from Origin now that they have all that money from Connoco to spend?

[Dr_Who]

Has there been any speculation of late about another takeover bid from Origin now that they have all that money from Connoco to spend?

LOL.. talks been around for a long time. Buyers can get a cheap energy company from BBP so why pay a premium for CEN?

[fish]

I sold most of my CEN earlier this year but still hold a few and had intended to get back in sometime next year-

Noticed a major fall and almost complete absence of buyers at close today .
Wondering why they fell so much today-was it for a good reason or just part of the general malaise ?

[Dr_Who]

Looks like bad news for CEN

CEN
20/01/2009
GENERAL

REL: 0845 HRS Contact Energy Limited

GENERAL: CEN: Hydrology, transmission constraints impact earnings

20 January 2009

HYDROLOGY AND TRANSMISSION CONSTRAINTS IMPACT CURRENT YEAR EARNINGS

Contact Energy today advised that extreme hydrological conditions this year,
combined with transmission constraints, particularly arising from the
unexpected removal of pole one of the inter-island HVDC link in November
2007, have had a negative impact on earnings for the current financial year.

As noted in previous Contact Energy announcements, in August South Island
wholesale prices were significantly higher than North Island prices due to
the combination of severe drought in the South Island and significant
transmission constraints limiting the delivery of lower-priced electricity
from the North Island to the South Island. This resulted in Contact selling
electricity to its lower North Island and South Island customers at a loss
during the winter period.

More recently, higher than average inflows into the South Island hydro dams,
which are currently at their highest levels in 10 years, combined with the
unexpected and continued reduction in aluminium production from the Tiwai
Point aluminium smelter from early November 2008, has resulted in significant
spillage across the South Island hydro dams. The extent of the spill has
been exacerbated by the absence of pole one which has, in this situation,
limited the volume of lower priced electricity that can be transferred from
the southern hydro systems to the North Island.

The lower aluminium production has resulted in up to 180 megawatts of
hydroelectric power, which would have otherwise been utilised at Tiwai, being
unable to find a path to demand due to transmission constraints.

All of these issues have contributed to Contact's hydro stations generating
274 gigawatt hours less in the first half of the financial year than the
prior corresponding period.

"These transmission constraints highlight how important a modern and robust
transmission network is to the efficient operation of the market. We expect
that the loss of pole one will continue to result in constraints between the
islands and therefore volatility in wholesale prices, as well as increased
risk of wholesale price separation between the North and South Islands. Until
pole one is replaced and other transmission constraints are resolved, the
wholesale electricity market will continue to be impacted during periods of
very high and very low hydro inflows," said Mr Baldwin.

In addition to the combination of extreme hydrological conditions and
transmission constraints, recent producer price index (PPI) increases have
resulted in significantly higher than expected gas costs for the 2009
financial year. During the six months ended 31 December 2008 there were two
significant increases in the quarterly PPI leading to an annualised increase
in PPI to 30 September 2008 of 13.6 per cent. The PPI movement is applied to
adjust gas prices in most of Contact's gas purchase contracts. These recent
increases will contribute to Contact paying about 25 per cent more per
gigajoule for gas in the 2009 financial year.

"The current financial year is somewhat unique in that New Zealand's hydro
system has experienced two extremes of hydrology within six months, each at
opposite ends of the scale. The combination of these extremes and increased
gas costs is expected to result in Contact's Earnings before Interest,
Taxation, Depreciation and Financial Instruments (EBITDAF) for the current
year being approximately 15 per cent lower than the last financial year. As a
consequence, Underlying Earnings After Tax is expected to be approximately 20
to 23 per cent less than the last financial year."

Mr Baldwin said that, notwithstanding the lower earnings forecast for the
current year, Contact continues to be extremely well placed to execute its
growth strategy.

"Construction is underway on both the first phase of the Tauhara geothermal
power project near Taupo and Contact's new gas-fired peaking station at
Stratford. In addition, in December 2008, Contact started injecting natural
gas into its recently acquired Ahuroa reservoir which, when fully developed
in 2010, will be New Zealand's first underground gas storage facility.
Excellent progress is also being made on the front-end engineering and design
of the 220 MW Te Mihi geothermal power project.

"Contact is building some of the country's most important infrastructure
projects and, in doing so, investing heavily in the New Zealand economy at a
time when the country needs it most."

[Dr_Who]

It seems like this impact can continue for sometime. This is very negative for CEN.

Anyone know the debt level of CEN?

[tobo]

last Financials : June-08
Total Current Assets _______ 551,579
Total Non-current Assets __4,651,666
TOTAL ASSETS __________ 5,203,245

Total Current Liabilities ______ 731,711
- including Borrowings _______ 132,811
Total Non-current Liabilities _1,567,463
- including Borrowings _______ 556,851
TOTAL LIABILITIES ________ 2,299,174
NET ASSETS ______________2,904,071

EBITDAF for that year 567,164

Where can we see more up-to-date figures?

[Dr_Who]

I hear they have to increase debt level of additional $1.5-2.0 billion to upgrade the infrastructure. In this credit crunch climate with a low NZD, this will hurt CEN big time.

[macduffy]

I hear they have to increase debt level of additional $1.5-2.0 billion to upgrade the infrastructure. In this credit crunch climate with a low NZD, this will hurt CEN big time.

That's interesting, doc.

What is the source of your info and over what time frame is the capex required?