Mercury NZ (MCY) H1 2025 earnings summary

Executive summary

• EBITDAF for HY25 was $418 million, down $16 million year-over-year, reflecting lower generation due to challenging hydrological conditions and higher operating expenses, partially offset by increased sales yields.

• Net loss after tax was $67 million, a $241 million decline year-over-year, mainly due to adverse non-cash movements in electricity derivatives.

• Nearly 50% of first-half earnings were reinvested in new and existing renewable assets, with over $1 billion currently committed to three major projects under construction, expected to add 1,136 GWh/year.

• Customer connections grew by 33,000 year-over-year, driven by cross-selling, telco, and mobile growth, with broadband market share surpassing 10%.

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

Financial highlights

• EBITDAF was $418 million, down $16 million year-over-year, mainly from a 295 GWh decrease in renewable generation and higher opex.

• Net loss after tax was $67 million, compared to a profit of $174 million in the prior period, primarily due to negative fair value movements in derivatives.

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

• Stay-in-business capex rose to $73 million (up $13 million); growth capex nearly doubled to $140 million.

• Electricity generation fell 7% to 4,191 GWh due to low hydro inflows.

Outlook and guidance

• FY25 EBITDAF guidance remains at $820 million, with normalized guidance at $900 million assuming average generation conditions.

• Full-year dividend guidance maintained at 24.0 cents per share, marking 17 consecutive years of growth.

• Stay-in-business capex guidance at $150 million, reflecting geothermal and hydro projects.

• Energy prices for consumers expected to rise, with residential bills up 9.7% from April due to increased infrastructure and wholesale costs.

• Synergy benefits from retail integration expected to materialize in FY26 as Elcon project completes.