Mighty River's profits plunge another reason to stop sales

Mighty River’s $60 million profits plunge is yet another reason for the Government to stop its uneconomic asset sales programme, says Labour’s SOEs spokesperson Clayton Cosgrove.

“The last couple of weeks have provided ample proof of the economic folly of asset sales, as the struggling state of the companies in this market is revealed. Solid Energy is in no state for sale and profits are plunging at Meridian and Mighty River. Air New Zealand is also expected to show a drop in profits.

“Mighty River’s profits have almost halved. That will have a real impact on their share price if the Government rushes ahead with the sale. Listing a struggling company in a market like this is economics for dummies.

Clayton Cosgrove said that if the sale goes through, next year taxpayers will only see half the dividend.

“Raising their dividend while profits fall is a cynical move by Mighty River to make the company more appealing but investors will see through it.

“Today’s $120 million dividend announcement is a timely reminder to New Zealanders that next year we may only see half of that money coming to us with much of it heading offshore.

“The litany of disasters on asset sales is hard to keep track of. Plunging profits, public protests, hundreds of thousands signing a referendum, Waitangi Tribunal rulings and looming court cases all add up to a complete shambles.

“The Government’s asset sales programme is plain bad economics. It’s time for it to stop.”