Mercury has ‘transformative year’

A year of transformative change, including becoming New Zealand’s largest wind power generator, has supported Mercury’s financial performance for the year to June 30, 2022.

Mercury celebrated becoming New Zealand’s biggest electricity retailer by customer market share and a multi-product utility provider during the year, following the $467 million acquisition of Trustpower’s retail business.

The results also reflect a more diversified generation portfolio, with wind generation now complementing Mercury’s hydro and geothermal generation.

That follows the acquisition of Tilt’s New Zealand wind operations in August and the commissioning of the northern section of the Turitea wind farm in December.

“This has been a year like no other. In less than 12 months we have become New Zealand’s largest wind generator after having no operating wind generation at the start of the year. We’ve also become New Zealand’s largest electricity retailer and welcomed 570 new colleagues to the company,” says Mercury chief executive Vince Hawksworth.

“We are embarking on a major period of growth and are well-positioned to thrive in a rapidly changing world that is increasingly recognising the urgency with which we must decarbonise.”

Mercury chair Prue Flacks says steps the company had taken to build further diversity and resilience means the outlook for Mercury remains bright.

“Decarbonisation will underpin significant growth for Mercury over the coming decade,” she adds. “With a scale retail business now contributing substantial forward revenue and a strong portfolio of existing and prospective generation assets, we expect to meaningfully contribute to emissions reduction.”

Mostly dry weather until June weighed on performance as Mercury focussed on prudent dispatch and lake management coming into winter. Elevated electricity spot pricing persisted during FY2022 but wet conditions across New Zealand from June have seen spot price levels ease as hydro generation displaces expensive thermal. 

Hawksworth says high electricity spot prices mean Mercury is focused on completing the southern section of the Turitea wind farm by mid-2023 and developing new wind and geothermal generation.

Mercury reported $581 million EBITDAF, $118 million up on the prior year’s $463 million EBITDAF reflecting the addition of wind generation and performance improvements in the core business. 

Operational expenditure was $230 million, up $40 million on the prior year, primarily due to an increase in operational activity resulting from acquisitions. Total stay-in-business capital expenditure was $68 million, up $12 million on the prior year. After normalising for acquisitions and new activity operational expenditure was broadly flat for its ninth year in a row.  

Mercury’s net profit after tax was $469 million, up $328 million on the previous year, driven by the $367 million net gain on sale of Tilt Renewables shareholding which was immediately reinvested into the associated acquisition of Tilt’s New Zealand operations and future development options.

The nearly $500 million commitment to the ongoing refurbishment of Mercury’s Waikato hydro stations continued, with the first turbine and generator replacement at Karapiro station now underway.

The board has declared a fully imputed final dividend of 12.0 cents per share.

Click here for Mercury’s 2022 Annual Report.