Mercury NZ posts 30% profit drop but lifts dividend, guidance
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The news: New Zealand electricity company Mercury NZ reported a net profit drop of nearly 30% in the half to December 2023, but hiked its interim dividend and full-year earnings guidance.
The numbers: Net profit after tax fell 27% to NZD174 million ($163.6 million) compared to the prior corresponding period. Mercury reported EBITDAF of NZD434 million, a 4% decline from NZD451 million a year earlier.
Operational expenditure climbed NZD31 million to NZD191 million due to increases in site maintenance and employee-related expenses, while net debt added NZD76 million to hit NZD1.98 billion due to higher interest and tax paid combined with a lift in capital expenditure on new generation projects and geothermal drilling.
The company's board declared an interim dividend of 9.3 cents per share, up almost 7% on the HY23 dividend. Full-year dividend guidance remained unchanged at 23.3 cents per share. However, FY24 EBITDAF guidance lifted from NZD835 million to NZD880 million owing to better pricing outcomes in the company's generation and wholesale segment.
The context: Mercury said its year-on-year profit slide was due to higher depreciation, interest charges and net changes in fair value. Its year-on-year earnings were also impacted by a strong performance in its hydro generation in HY23.
The Auckland-based company, however, said the business was focused on executing against Mercury's commitment of up to NZD1 billion investment over the financial year to generation development over the next three years. Two of its three major projects are expected to meet the timeframe, with the third — its Kaiwaikawe wind farm — experiencing delays, with construction now slated to begin in FY25.
What they said: Mercury's CEO Vince Hawksworth said: "The renewable energy sector is undergoing transformational growth, and we are part of that change. The opportunity ahead of us is material — Aotearoa New Zealand's total energy consumption is expected to reach nearly 60% renewable by 2050, well up from the 20% we're currently at."
The source: ASX announcement
