Mercury NZ (MCY) H2 2024 earnings summary

Executive summary

• Achieved record EBITDAF of NZ$877 million for FY24, with 8.8 TWh of renewable generation: hydro (47%), geothermal (30%), wind (23%), and wind output up 40% year-over-year due to new projects.

• Net profit after tax rose to NZ$290 million, 2.6 times higher than last year, driven by strong generation, higher trading margins, and investment in new renewable projects.

• Completed integration of Mercury and Trustpower under one brand, creating a retail business with 864,000 customer connections and delivering operational synergies.

• Major projects commissioned ahead of schedule and under budget, including Kaiwera Downs Stage 1, with construction started on Kaiwera Downs 2 and Ngā Tamariki geothermal expansion.

• Sixteenth consecutive year of dividend growth, with ordinary full-year dividend at 23.3 cents per share, up 7% year-over-year.

Financial highlights

• Revenue rose to NZ$3,424 million, with EBITDAF at NZ$877 million, up from NZ$841 million in FY23, driven by higher sales yield and wholesale prices despite lower hydro generation.

• Net profit after tax (NPAT) was NZ$290 million, up NZ$178 million year-over-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.

• Stay-in-business capex rose to NZ$142 million, mainly from geothermal drilling and hydro rehabilitation.

Outlook and guidance

• FY25 EBITDAF guidance set at NZ$820 million, reflecting lower expected hydro production and higher gas costs.

• Ordinary dividend guidance up 3% to NZ$0.24 per share for FY25.

• CapEx guidance for FY25 at NZ$160 million, focused on geothermal drilling and hydro rehabilitation.

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

• Trading gains expected to be nil for FY25 due to market volatility.