Contact Runs Low on Water; Cutting our Near-Term Forecasts but FVE Unchanged
We're forced to cut our near-term earnings forecasts for narrow moat-rated Contact Energy after April operating statistics highlighted the current difficult environment. Heavy rainfall in the North Island is depressing electricity prices and thus hurting Contact's revenue, while low rainfall around Contact's hydroelectric assets in the South Island force it to rely more heavily on gas-fired generation, pushing up its operating costs. As a result, earnings are getting squeezed from both ends. We ...Contact Energy sell electricity, gas and liquefied petroleum gas (LPG) products and services to residential, small business, commercial and industrial customers. Co. has two operating segments: Integrated Energy, which is a generator of electricity and a purchaser and retailer of electricity and natural gas to customers throughout New Zealand; as well as Other, which consists of other products and services provided by Co., which includes the sale of LPG.
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