Mercury NZ (MCY) H2 2024 earnings summary

Executive summary

• Achieved record EBITDAF of NZ$877 million for FY 2024, with 8.8 TWh of renewable generation from hydro, geothermal, and wind sources, wind up 40% year-over-year due to new projects.

• Completed integration of Mercury and Trustpower under one brand, creating a retail business with 864k customer connections and enhancing operational efficiency.

• Commissioned major projects ahead of schedule and under budget, including Kaiwera Downs Stage 1, and began construction on Kaiwera Downs 2 and Ngātamariki geothermal expansion.

• Retail integration delivered on time and on budget, with expected synergies to exceed previous targets despite inflationary pressures.

• Sixteenth consecutive year of dividend growth, with ordinary full-year dividend at 23.3 cents per share.

Financial highlights

• EBITDAF reached NZ$877 million, a record result, up from NZ$841 million in FY23, driven by higher sales yield and wholesale prices, offset by lower generation and higher opex.

• Net profit after tax (NPAT) was NZ$290 million, 2.6 times higher than last year, mainly due to fair value movements and absence of prior year impairments.

• Operating cash flow was NZ$612 million, with nearly 50% reinvested into the business.

• Ordinary dividend increased to 23.3 cents per share, marking 16 years of growth.

• CapEx increased, with NZ$366 million invested, mainly in generation assets and drilling; stay-in-business capex rose to $142m, mainly from geothermal drilling and hydro rehabilitation.

Outlook and guidance

• FY 2025 EBITDAF guidance set at NZ$820 million, down NZ$57 million from FY 2024, reflecting lower expected hydro production and higher gas costs.

• Ordinary dividend guidance up 3% to NZ$0.24 per share for FY 2025.

• CapEx guidance for FY 2025 at NZ$160 million, with ongoing investment in geothermal drilling and hydro rehabilitation.

• Trading gains expected to be nil for FY 2025 due to market volatility.

• Market conditions remain volatile, with high short-term electricity and gas prices due to low hydro and gas availability.