Mercury NZ (MCY) H1 2025 earnings summary

Executive summary

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

• Net loss after tax was $67 million, a $241 million decrease from the prior 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 $1 billion currently committed to three major projects under construction.

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

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

Financial highlights

• Revenue for the period was $1,755 million, up from $1,605 million year-over-year.

• 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, driven by negative fair value movements in derivatives.

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

• Stay-in-business capex increased to $73 million (up $13 million), and growth capex nearly doubled to $139 million.

Outlook and guidance

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

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

• Stay-in-business capex guidance for FY25 is $150 million, reflecting geothermal and hydro projects.

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

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