Woeful CLP fails to impress in first quarter
Falling electricity demand, intense competition and penalty take toll on power firm's operations
Analysts may have expected CLP to report better earnings this year but the power supplier's performance in the first quarter remained dim.
Total amount of electricity sold in Hong Kong and on the mainland was down 4.2 per cent to 6,655 gigawatt-hours in the three months to March amid dwindling demand from both local households and Guangdong Power Grid, which turned to rely more on other supply bases.
The company said in a filing to the Hong Kong stock exchange yesterday that a much dryer spring this year had led to lower use of dehumidifiers, resulting in a 9.8 per cent drop in local residential demand.
CLP declared an interim dividend of 53 HK cents per share.
The company will form a joint venture with PetroChina in the next few months to operate eight gas-fired plants at Black Point, which could supply up to a quarter of the city's annual demand.
Meanwhile, managing director Richard Lancaster will replace Andrew Brandler as chief executive on September 30.
Overseas, the business environment remained challenging. The group's Australian arm gave up its door-knocking sales channel in March after a poor response, while executives warned of a tariff rise as suppressed wholesale prices, falling demand, regulatory uncertainty and intense competition continued to squeeze the firm's margins.
In Taiwan, Ho-Ping Power, in which CLP owns a 20 per cent stake, was fined NT$1.35 billion (HK$347.4 million) for concerting with other suppliers to stop Taiwan Power from reducing tariffs. CLP, which has to shoulder HK$62 million of the penalty, said the fine had no basis and Ho-Ping would bring the matter to court if an appeal failed.
In India, its recently opened coal-fired plants at Jhajjar were still operating at just 35 per cent of capacity because the state-owned Coal India could not supply an adequate amount of coal. However, after repeated negotiations, the government finally approved the import of 1.7 million tonnes of coal, which could boost the plants' power generation.
The group said it was urging the railway company to improve the delivery time of coal while also upgrading the plants' equipment to better use the poor-quality coal.