Mercury NZ Limited (NZX: MCY) Resilient Performance and Ambitious Acquisitions

Tuesday 17th August 2021

The year ended 30 June 2021 saw Mercury deliver resilient financial performance, along with announcing two significant acquisitions to grow the company’s scale and capabilities.

Mercury reported EBITDAF of $463 million for the period, down 6% on FY20 EBITDAF of $490 million.

The operational result was adversely impacted by a sustained period of low inflows into Lake Taupo (for the second consecutive year) and an unplanned outage at the Kawerau geothermal power station in June.

The financial impact of this loss of generation was more acute than previous years due to historically high spot prices as a consequence of low national fuel (hydro and gas) availability.

Capital expenditure (capex) of $250 million comprised $56 million of stay-in-business capex and $194 million of growth investment. Operational expenditure remained broadly flat for the eighth consecutive year on a normalised basis.

Net profit after tax was $141 million, down $68 million on the previous year.

“Mercury has delivered a resilient financial performance in the face of some challenging market headwinds,” said Vince Hawksworth, Mercury Chief Executive.

“We have also made two ambitious acquisitions that will give Mercury additional scale and capability as we navigate a rapidly evolving landscape.

DIVIDEND

The Board has approved a fully imputed final dividend of 10.2 cents per share (cps), taking total ordinary dividends for FY21 to 17.0cps, an increase of 7.6% on FY20. The dividend will be paid on 30 September 2021. This is Mercury’s 13th consecutive year of ordinary dividend growth.

OUTLOOK

“Across the industry in New Zealand, more than $1.5 billion of investment is already committed by the industry to the construction of renewable infrastructure. This means the country is well placed to increase the proportion of generation that is renewable from around 80% today to over 90% within five years,” said Prue Flacks, Mercury Chair.

“However, the current market conditions illustrate the challenge of ensuring the right balance is struck between investment in decarbonisation, security of supply, and ensuring energy is affordable.”

“Mercury strongly supports the goal of net zero carbon emissions by 2050, and we are well placed to play our part in achieving that goal. A key aspect is that policy certainty is required to send the right investment signals. One wind farm a year is required to be built to achieve net zero carbon emissions by 2050. Delivering that outcome, while maintaining security and affordability should be foremost in the Government’s mind,” she said.

GUIDANCE

Mercury’s FY22 EBITDAF guidance has been set at $590 million with increased earnings from the Turitea wind farm, newly acquired Tilt Renewables’ New Zealand assets and our Thrive programme. Guidance at the time of this report assumes 3,900GWh of hydro production and is subject to any material events, significant one-off expenses or other unforeseeable circumstances including hydrological conditions. FY22 stay-in-business capex guidance is $70 million.

FY22 ordinary dividend guidance is 20.0cps, fully imputed, representing a 17.6% increase on FY21 and the 14th consecutive year of ordinary dividend increases.

Please see the links below for details

Results Announcement FY2021

News Release

Full year results presentation FY2021

Annual report and financial statements FY2021

Distribution notice FY2021

Source: Mercury NZ Limited

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