Mercury NZ records earnings jump on green energy expansion
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The news: New Zealand electricity company Mercury NZ reported a 159% profit rise in the 2024 financial year as increased wind and geothermal energy generation and higher customer prices boosted full-year earnings.
The numbers: Net profit after tax grew 159% year on year to NZD290 million ($263.53 million), short of average analysts' forecasts of NZD319.7 million.
Its EBITDAF was up 4% to NZD877 million as electricity generation fell 3% to 8,780 gigawatt hours year over year. Stay-in-business capital expenditure rose 19% to NZD142 million as the company's geothermal drilling campaign ramped up during the year.
The board declared a final dividend of 14 NZ cents per share, in line with consensus forecasts, bringing the full-year dividend to 23.3 cents, up 7% on FY23.
Mercury guided FY25 EBITDAF guidance at NZD820 million and FY25 stay-in-business capital expenditure guidance at NZD160 million. FY25 ordinary dividend guidance is 24 NZ cents per share, representing a 3% increase on FY24.
The context: Mercury said its profit growth was driven by changes in the fair value of unhedged financial instruments, while the rise in earnings was due to increased wind and geothermal generation and higher customer prices, offset by reduced hydro generation and higher operating costs.
Mercury CEO Vince Hawksworth noted that a key focus of the year was executing against the company's commitment to invest up to NZD1 billion in new generation projects.
Two of the three projects signalled were progressed during the year — the expansion of the Ngā Tamariki geothermal station and the second stage of the Kaiwera Downs wind farm — while the Kaiwaikawe wind farm was delayed due to procurement and construction logistics.
What they said: Mercury chair Scott St John said: "The energy transition will deliver long term gains for the nation; however, it requires careful navigation — particularly to maintain reliable power while rapidly and affordably scaling up renewables".
"As we continue to invest in renewables, generating capacity must remain flexible enough to quickly adjust to changing environmental conditions, such as low rainfall or cloudy, still days," he said.
The source: ASX announcement
