Contact Energy Struggles to Explain 31% Drop to Shareholders
Managing Director of Contact Energy, David Baldwin, attempted to explain the sharp 31% drop in the company's annual profits to shareholders at the firm's annual meeting in Wellington. Continued attempts were also made to brace the markets and consumers for the impending power price increases during the current tough times.
Mr. Baldwin's NZX-posted speech stated that while many people had an opinion on the electricity market, it was poorly understood, and the position of Contact is not to be doubted. The sharp drop of the firm was given an attempted explanation by using terms such as "volatile wholesale market", "weather constraints", "transmission", "distribution" and the likes.
Providing an optimistic outlook, company's Chairman Grant King said that Contact's financial position is quite strong as it has retained $120 million from a profit distribution plan. In addition, the firm's retail bond offer has also provided it with a whooping $300 million. "Looking ahead, we are realistic about the market conditions Contact faces. The economic conditions currently impacting New Zealand are expected to continue to dampen demand growth and a range of market operating uncertainties remains", he shared.
Despite trying its best to put the concerns of investors and analysts at ease, Contact did not provide any guidance for the upcoming 2010 financial year. Currently, the company's share is priced at $6.20 a piece.