Mercury and Meridian report strong growth

Energy retailers and generators Mercury and Meridian Energy have both had a successful financial year.

Developing a distinctive brand by advancing its electric bike campaign and launching its converted 1957 Ford Fairlane “Evie” to challenge misconceptions about electric vehicles is also benefitting the company, Mercury chief executive Fraser Whineray says.

Mercury has reported a 7% lift in operating earnings (EBITDAF) to $561 million for the 2018 financial year ended June 30 ($523 million FY2017), the record result driven by a second consecutive year of record hydro generation across the Waikato River catchment, and high geothermal availability.

Its net profit after tax of $234 million is up 27%.

Mercury’s final ordinary dividend of 9.1 cents per share will be paid on September 28.

Whineray says that sustaining high levels of operational performance while executing a number of key strategic projects puts Mercury in a strong position for the year ahead.

Brand recognition has increased strongly to 63% from 43% since Mercury’s brand relaunch in 2016.

The Mercury brand maintained its trader churn (customer switching to an alternative retailer) advantage at 6.4% compared to the rest of the market at 8.1%.

“Retail market conditions remain very competitive, however our brand and customer service activity, focused on inspiring, rewarding and making things easy for our customers, continues to show strong results,” Whineray says.

Mercury also completed the purchase of a 19.99% stake in Tilt Renewables, a company with significant operational and consented wind generation interests in Australasia, in May.

“It gives Mercury a meaningful interest in significant development opportunities related to Australia’s accelerating transition to renewable energy sources and is part of Mercury’s broader wind strategy,” Whineray says.

Meridian Energy has meanwhile achieved its highest level of earnings, while overcoming the company’s lowest New Zealand generation since 2013.

Group EBITDAF has increased 1.4% to $666 million, thanks to better hydro inflows in the second half of the year which helped to turn around a half year EBITDAF decline of 7%.

“We are very pleased with what we have achieved during the last financial year,” Meridian chief executive Neal Barclay says.

Strong cashflows have allowed Meridian to declare a 1.5% higher dividend for the year.

The company expanded its Australian renewable generation portfolio to support the growth of its Australian retail brand Powershop, again named Australia’s greenest power company.

Barclay says the electricity sector will play a key role in enabling the New Zealand Government to achieve its goal of zero carbon by 2050.

From July 1, Meridian Group went net carbon zero across its operations.

Meridian also provides cheap overnight rates for customers with electric vehicles.

“We’re looking forward to helping tackle New Zealand’s carbon emissions and combat climate change with the support of renewable energy,” Barclay says. “The future is undoubtedly strong for our sector.”