Robust performance in challenging conditions for Mercury

Careful portfolio management helped mitigate the full impact of dry weather and reduced generation for Mercury.

“Despite challenging operational conditions, we’ve continued to pursue growth in new renewables (46% of HY25 earnings reinvested into new and existing assets) and, importantly, support security of supply,” says Mercury chair Scott St John.

“We’ve seen good progress on our commitment to investing over $1 billion in new renewables, with three renewable projects under construction – enough to power up to 142,000 houses with renewable energy.”

Low hydro inflows contributed to reduced generation, impacting earnings, says Mercury.

Lake Taupo was above normal levels by the end of the 2024 calendar year, despite low hydro inflows, due to a focus on rebuilding storage ahead of winter 2025, it says.

Mercury reports EBITDAF of $418 million ($16 million down on the prior comparable period) largely reflecting lower generation and increased operating expenses, offset by increased sales yields.

Net profit after tax was a loss of $67 million for the period ($241 million lower than the prior comparable period), largely due to adverse non-cash movements of non-hedge accounted electricity derivatives, Mercury says.

Operational expenditure tracked up to $207 million ($16 million up on the prior comparable period) reflecting continued investment in generation maintenance, it says.

Meanwhile, stay-in-business capital expenditure for the period was $73 million (up $13 million on the prior comparable period) and growth capital expenditure was $139 million (up $69 million on the prior comparable period).

This largely related to construction costs for new generation projects – the fifth unit at $267 million Nga Tamariki geothermal station (46MW with generation expected from later this year), Kaiwera Downs wind farm expansion ($2 486m,155MW) expected to reach full generation by the end of the 2026 calendar year and the $287m, 77MW Kaiwaikawe wind farm.

The $90m Karapiro Hydro Station upgrade (representing a 16.5MW uplift) is on track for completion in August 2025.

“Discussions to explore market options for the Huntly Power Station will be one of the important measures we take into the future to help improve security of supply,” says St John.

A payout of 9.6 cents per share (up 3% on the 1HY24 interim dividend with full year dividend guidance unchanged at 24 cents per share) will be made on April 1, 2025.

New Zealand Aluminium Smelters became Mercury’s largest customer, with the start of a 20-year contract (657GWh pa) broadly equivalent to the annual output of the entire Kaiwera Downs Wind Farm.

Mercury also agreed a long-term contract with Fonterra to support electrification of Fonterra’s Edgecumbe and Waitoa operations.

Progress was made on an EV time-of-use charging trial, says Mercury.

Looking forward, energy prices (gas and electricity) for consumers are expected to increase across the board, it says.

“From April, the overall electricity bill increase for Mercury residential customers will be about 9.7% on average.”

This primarily reflects increases in lines and transmission charges due to rising costs and the level of investment in infrastructure required, in line with the Commerce Commission’s price path reset for the next five-year period, says Mercury, adding it also reflects the rise in the cost of wholesale electricity and other costs.

Mercury says customer energy numbers are steady, including 200,000 customers with two or more products.

“FY25 EBITDAF guidance remains at $820 million.”

Click here for the full 2025 Mercury interim report.