Contact Energy is this week likely to confirm to the market just what a tough year it has been.
The company is likely to report its full-year profit for June on Friday and Forsyth Barr broker Peter Young is forecasting operating profit to fall by nearly 19% in the period.
Group earnings before interest and tax were forecast to fall by 45% and the after-tax profit to fall to $109 million, 54% lower than the previous corresponding period.
"This has been an extremely tough year for Contact, so the positives are reasonably limited.
We expect the main positives to come from forecast and guidance information to be presented to the market," Mr Young said.
In particular, he expected Contact to reduce its capital expenditure forecasts in light of the strong New Zealand dollar.
A "positive of sorts" would come from the dividend.
As a signal to investors that this was a one-off year, Forsyth Barr forecast Contact would maintain a 28c dividend and would use the profit distribution plan to minimise the cash costs, he said.
There had been some extreme hydro conditions this year, he said.
Contact was short of generation in the South Island for the first two months of the financial year and North Island generation was unable to make up the shortfall.
There had been too much water and low wholesale prices in the last eight months of the year, which was not good news for a generator such as Contact.
"Contact then made the unfortunate decision to raise prices before an election and increase directors' fees.
"The public fallout has seen customer numbers fall approximately 7.5% to around 480,000."
However, over the past month there had been a turnaround in the short-term issues that largely caused the 2009 full-year result.
There were signs that normality was returning to the wholesale market, Mr Young said.
Forsyth Barr believed that Contact had been oversold relative to TrustPower.
