Mercury NZ (MCY) H2 2025 earnings summary

Executive summary

• Delivered steady FY 2025 performance with EBITDA of $786 million, despite a 10% reduction in hydro production and total renewable generation of 7.9 TWh, normalised to 8.8 TWh with AI and upgrades.

• Maintained 17th consecutive year of dividend growth, with a full-year dividend of $0.24 per share, up 3% year-over-year.

• Advanced three major renewable projects totaling $1 billion and 1.1 TWh additional capacity, with long-term agreements signed with Fonterra, Visy, and NZ Aluminium Smelter.

• Customer connections grew to 906,000, a 5% increase, driven by multi-product offerings and telco cross-sales.

• Refreshed strategy targets 3.5 TWh of new generation by 2030 and up to 5 TWh geothermal potential post-2030.

Financial highlights

• FY 2025 EBITDA/EBITDAF was $786 million, down from $877 million in FY 2024, mainly due to low hydro generation.

• Trading margin declined by $75 million year-over-year due to lower generation, partially offset by improved sales.

• Operating cash flow was $612 million; stay-in-business CapEx at $138 million, growth investment at $154 million.

• Achieved $34 million in synergies, including $30 million in OPEX savings, with opex per connection down 11% year-over-year.

• Declared ordinary dividend of $0.24 per share, consistent with a 70–85% payout of free cash flow.

Outlook and guidance

• FY 2026 EBITDA/EBITDAF guidance set at $1 billion, assuming 4.4 TWh hydro generation, with a dividend of $0.25 per share and $150 million stay-in-business CapEx.

• Growth CapEx for FY 2026 expected to be $600 million, focused on project completions and network upgrades.

• Plan to deliver 3.5 TWh of new generation by 2030, with 1.1 TWh under construction and up to 5 TWh geothermal potential post-2030.

• OpEx target of $370 million, with most cost reductions already implemented.

• FY 2026 guidance subject to material adverse events, significant one-off expenses, and unforeseen circumstances.