Zenith Energy has reported a substantial decrease in first-half profit as it undergoes a transition, a week after local rival Pacific Energy delivered strong half-year results.
Zenith posted a net profit after tax of $2.57 million from revenue of $22.91 million.
This was down from $7.38 million profit from revenue of $33.79 million in the previous corresponding period.
In a statement, the company said the profit decrease was due to a shift in its portfolio away from manage, operate and maintain/engineer, procure and construct (MOM/EPC) contracts to focus on long-tenure build, own and operate (BOO) contracts.
The company recorded 53 per cent growth in BOO revenue and 123 per cent growth in BOO earnings before interest, tax, depreciation and amortisation (EBITDA), compared with the previous corresponding period.
Zenith increased its power station assets by 51 per cent in the six months to the end of 2018 to around $113 million.
The company said its full-year earnings guidance of between $19 million and $21 million remained on track.
Last week, Pacific Energy reported its underlying EBITDA increased by 56 per cent to $32.8 million, and it net profit was up 76 per cent to $14.1 million.
The company also has increased its focus on BOO contracts and its BOO-related earnings was up 44.2 per cent to $30.3 million.
Pacific’s results include six months of Contract Power Group's revenue and costs, which it acquired in April.
Pacific managing director James Cullen said the acquisition did not dilute shareholder value.
“We were able to complete the Contract Power acquisition with only minimal (11 per cent) dilution to shareholders, quickly generate solid cash flows to reposition our balance sheet for further growth and deliver EPS growth to our shareholders of over 50 per cent,” he said.
“In addition to being very pleased with the overall result and Contract Power’s performance for the first full six months under our ownership, a clear highlight was the generation of strong operating cash flows of $27.2 million.
“This enabled progressive debt reduction over the course of the six months and fully funded the company’s capex.”
Shares in Zenith closed trade 5.26 per cent down at 72 cents each.