Mercury profit rebounds as strong hydro boosts earnings and dividend

Mercury NZ has reported its first-half result. Photo / Supplied

Above-average hydro conditions and lower operating costs helped power generator and retailer Mercury NZ boost its earnings and dividend over the first half.

Mercury’s earnings before interest, tax, depreciation, amortisation and fair-value movements (ebitdaf) came to $537 million in the six months to December 31, up 28% on the previous comparable period.

Its net profit was $20m – a 130% improvement from the $67m loss in the previous comparable period, which covered the 2024 winter wholesale price spike brought on by reduced gas supply and a prolonged dry spell.

The company – 51% owned by the Government – increased its dividend by 4% to 10c.

Mercury’s peers – Contact Energy and Genesis Energy – are in the process of raising about $1 billion from the market but Mercury said its balance sheet remained strong, “with capital headroom and prudent risk settings”.

“This enables us to continue investing in high-quality renewable generation assets and provides flexibility to deliver sustainable shareholder returns, value for our customers and New Zealand,” chief executive Stew Hamilton said.

Mercury said its full-year ebitdaf guidance of $1.0b remained on track because of strong renewable generation volumes, disciplined execution of new generation projects and a focus on operating costs.

The 2025 year’s ebitdaf was $786m.

Hamilton said all three of Mercury’s major renewable developments, totalling $1b of investment, were progressing on budget and on time.

The new Ngā Tamariki Geothermal Station unit came online in January, while stage two of Kaiwera Downs Wind Farm and Kaiwaikawe Wind Farm are both due to begin generating in 2026.

“Our disciplined strategic execution is delivering a strong performance today, while enabling us to invest significantly in new renewable generation for New Zealand, helping meet future demand growth and build resilience,” he said.

“We are on track to deliver on our plan of adding 3.5 terawatt hours [TWh] of new generation by 2030 [the equivalent of powering an additional 430,000 homes] through leveraging our strengths in wind and geothermal and our advantaged project pipeline,” he said.

“Our contributions are supporting the fastest rate of renewable generation development in history, helping power economic growth over the next two decades.”

Mercury was also investing significantly in its existing assets, he said.

The result was largely in line with market expectations.

Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.

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