By David Winning

SYDNEY--Meridian Energy Ltd. raised its final dividend, but said it has ceased its capital management program following Rio Tinto's decision to close its smelter in New Zealand.

Meridian, which generates around 30% of New Zealand's electricity, said its net profit totaled 176 million New Zealand dollars (US$115 million) in the 12 months through June, down from NZ$339 million a year earlier.

The drop in annual net profit reflected higher depreciation on previously revalued assets and movements in forward prices and rates on financial instruments used to manage risk, the company said.

Earnings before interest, tax, depreciation, depletion, amortization, impairment, fair value changes and other gains and losses--or ebitdaf--were up 2% at NZ$854 million.

Directors of the company declared a final dividend of 11.2 New Zealand cents a share, which was 4% higher than a year earlier.

Meridian said Rio Tinto's announcement of its intention to close the Tiwai aluminum smelter, drove the decision to stop its capital management program. The last payment was a 2.44 cent-a-share special dividend declared in February.

In 2018, Meridian had outlined a capital management plan of NZ$250 million over the two years through February 2022.

"There are significant challenges on the horizon, particularly the global impact of the Covid-19 pandemic and, the closure of the Tiwai Point Aluminum Smelter," said Chief Executive Neal Barclay. "These changes will affect the way in which we operate our business."

The volume of electricity sold to customers increased by 18% and 24% in New Zealand and Australia, respectively, in the 2020 fiscal year. Meridian also said customer numbers increased in both markets. 



  Write to David Winning at david.winning@wsj.com