UPDATE 1-NZ's Contact Energy year profit dips

(Adds company comment)

WELLINGTON, Aug 26 (Reuters) - Contact Energy Ltd (CEN.NZ), New Zealand's second-largest listed power company, reported a 1 percent decline in year net profit and indicated the outlook was tough due to low hydro lake levels.

Contact, which generates nearly a third of New Zealand's electricity, said the first two months of the new financial year were well below expectations, and while it did not provide a detailed forecast, it did not expect to significantly beat the previous result in the current financial year.

The company made a net profit of NZ$237.1 million ($167 million) for the year ended June 30, compared with NZ$239.6 million last year.

Analysts expected a net profit of around NZ$232.5 million, according to Reuters Estimates.

Contact declared an unchanged dividend of 17 cents a share.

Shares in Contact, 51.2 percent owned by Australia's Origin Energy Ltd (ORG.AX), fell 1.8 percent to NZ$8.16. The stock has gained almost 1 percent so far this year to Monday, compared with a 17.7 percent fall in the benchmark NZSX-50 Index .NZ50.

Origin is currently the subject of a hostile $13.1 billion takeover bid by Britain's BG Group Plc (BG.L), which has said it would sell the Contact stake if its bid is successful.

Low levels in South Island lakes, which provide water for Contact's hydroelectric power stations that generate power for the island, meant Contact had to buy power on the wholesale electricity spot market, chief executive David Baldwin said.