Why Contact Energy Limited (ASX:CEN) shares fell on its FY18 results

New Zealand-based Contact Energy Limited (ASX: CEN) shares are down 1.5% to $5.17 at the time of writing after the release of its FY18 results.

The diversified integrated energy company announced an EBITDAF drop of 4%, underlying profit down 9%, but its declared dividend of 32c per share is up 23%.

Contact’s results demonstrated a second successive year of below-average hydro inflows and a continuation of intense retail competition.

But the company has $301 million in free cash flow with operating costs reducing by $20 million, with its sale of the AGS facility and Rockgas LPG business two significant transactions over the year.

Going forward Contact will focus on accelerated digital transformation in its customer business with clear efforts made to decarbonise New Zealand’s energy sector.

The energy sector is one to watch on the ASX in the next week as reporting season notches up a gear, with Woodside Petroleum Limited (ASX: WPL) reporting on August 15 and Origin Energy Ltd (ASX: ORG) on August 16.

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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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