Mercury NZ (MCY) H2 2025 earnings summary

Executive summary

• Delivered steady FY 2025 performance with EBITDAF of $786 million, down 10% year-over-year, despite a 10% reduction in hydro production and challenging hydrological conditions; total renewable generation was 7.9 TWh, normalised to 8.8 TWh with AI and upgrades.

• Net profit after tax fell to $1 million, a $289 million decrease year-over-year, mainly due to lower EBITDAF and changes in unrealised gains/losses on unhedged electricity derivatives.

• 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 under construction, representing a $1 billion investment for 1.1 TWh additional capacity, with long-term agreements signed with Fonterra, Visy, and NZ Aluminium Smelter.

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

Financial highlights

• EBITDAF for FY 2025: $786 million, down from $877 million in FY 2024, mainly due to the fourth lowest hydro generation from Waikato since 1980.

• Net profit after tax: $1 million, down from $290 million year-over-year, impacted by lower EBITDAF and adverse unrealised fair value movements in derivatives.

• 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 CapEx at $347 million, up $193 million year-over-year.

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

Outlook and guidance

• FY 2026 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.

• Guidance subject to hydrological and market conditions, material adverse events, and significant one-off expenses.

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