Mercury NZ (MCY) H1 2025 earnings summary

Executive summary

• EBITDAF for H1 FY25 was NZD 418 million, down NZD 16 million year-over-year, reflecting lower generation due to challenging hydrology and higher operating expenses, partially offset by increased sales yields.

• Net loss after tax of NZD 67 million, mainly due to a NZD 290 million negative fair value movement in unhedged financial instruments and adverse non-cash derivative losses.

• Over NZD 1 billion committed to three major renewable projects under construction, expected to add over 1,136 GWh per annum, all on time and on budget.

• Customer connections grew by 33,000 to 888,000, mainly through cross-selling telco and mobile services, with strong growth in multi-product and broadband segments.

• Interim dividend declared at 9.6 cents per share, up 3% year-over-year; full-year dividend guidance maintained at 24.0 cps, marking 17 consecutive years of growth.

Financial highlights

• Trading margin was NZD 617 million, with revenue at NZD 1,755 million, and EBITDAF at NZD 418 million, all down year-over-year due to lower generation and higher opex.

• Net loss after tax was NZD 67 million, compared to a profit of NZD 174 million in the prior period.

• Operating expenses increased by NZD 16 million to NZD 207 million, mainly from higher generation maintenance and brand refresh costs.

• Operating cash flow fell 20% to NZD 227 million, mainly from higher provisional tax payments.

• CapEx for growth nearly doubled to NZD 140 million, with stay-in-business CapEx at NZD 73 million, up NZD 13 million year-over-year.

Outlook and guidance

• Full-year EBITDAF guidance maintained at NZD 820 million, with normalized guidance at NZD 900 million assuming average generation conditions.

• Dividend guidance for FY25 held at NZD 0.24 per share, marking 17 consecutive years of dividend growth.

• Stay-in-business CapEx guidance for FY25 at NZD 150 million, reflecting geothermal and hydro projects.

• Ongoing focus on renewable project delivery and customer electrification initiatives.

• Hydro generation forecast 250 GWh lower at 3,550 GWh due to 50th percentile inflows; geothermal output down 47 GWh from outages.