Natural gas distributor Envestra is predicting a 30 per cent jump in profit this year despite its customers using less gas than they were a decade ago.
The takeover target also reaffirmed its rejection of all-scrip offer from larger gas pipeline owner APA.
Envestra maintained guidance for a 30 per cent improvement in full year net profit of $140 million, up from $108 million in the 2011/12 financial year.
Gas volumes delivered to residential and commercial markets for the first three months of the 2013/14 year were down 11 per cent on the previous year, and overall deliveries down seven per cent, chairman John Allpass told the company's annual general meeting in Adelaide.
Those volumes are also two per cent down on 2003.
But increases in gas prices for retailers through regulated tariffs in NSW, South Australia and Queensland and reductions in finance costs will enable the bigger profit, he said.
The company is delivering an eight per cent higher dividend of 6.4 per cents a share in 2013/14.
Mr Allpass said national policies should be encouraging natural gas.
It has a lower carbon footprint than coal, lower costs and better reliability than alternatives such as wind and solar, he said.
APA's bid for Envestra, which offers 0.1678 of its shares for every Envestra share, significantly undervalued the company and was not in the best interests of shareholders, Mr Allpass said.
"While there has been some dialogue with APA's representatives, no further proposal has emerged," Mr Allpass said.
A merger of both groups' pipelines and distribution networks would create Australia's largest energy infrastructure group, worth nearly $7 billion on current values.
APA is Envestra's largest shareholder with a one-third stake, and already operates its target's assets.
Its chairman Len Bleasel said after APA's general meeting last week he would not increase the offer, saying it had valued the company correctly, in light of new regulations on rates of return being imposed on in infrastructure companies.
Envestra shares closed steady at $1.135.
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