Mercury cuts earnings guidance as dry weather impacts hydro generation
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The news: Electricity company Mercury NZ has trimmed its full-year earnings guidance due to lower-than-expected hydro generation amid continued dry weather in the Taupō catchment in New Zealand's North Island.
The numbers: Mercury now expects earnings before interest and taxation, depreciation and amortisation and fair value adjustments (EBITDAF) to total NZD760 million ($707 million) for the year, down from NZD820 million.
The revision reflects an expected 150 gigawatt hour (GWh) decrease in full-year hydro generation to 3,400GWh, and projected below-average hydro inflows and lake level through to 30 June.
Mercury's dividend guidance remains unchanged at 24 cents per share.
The context: Mercury said New Zealand's hydrological inflows were the lowest on record during the March quarter. The company's third-quarter hydro generation was down 29% year on year to 710GWh.
The Auckland-based electricity generation and utility retailer also saw lower average wind speeds during the quarter, leading to a 28% drop in wind generation to 373GWh for the period.
