Mercury NZ (MCY) H2 2024 earnings summary

Executive summary

• Achieved record EBITDAF of $877 million for FY24, driven by higher wind and geothermal generation, increased customer prices, and 8.8 TWh of renewable output from hydro, geothermal, and wind sources.

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

• Advanced major renewable projects, including commissioning Kaiwera Downs Stage 1, starting construction on Kaiwera Downs 2 and Ngā Tamariki geothermal expansion, and committing over $700 million to new generation.

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

• Leadership transition announced, with Stew Hamilton to succeed Vince Hawksworth as CEO.

Financial highlights

• EBITDAF reached $877 million, up 4% year-over-year, despite a 21% drop in hydro generation due to drier conditions.

• Net profit after tax was $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 $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 $142 million, mainly from geothermal drilling and hydro rehabilitation.

Outlook and guidance

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

• Ordinary dividend guidance up 3% to 24.0 cents per share for FY25.

• FY25 stay-in-business CAPEX guidance is $160 million, focused on geothermal drilling and hydro rehabilitation.

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