Mercury upgrades earnings forecast while Ebos downgrades on higher fuel costs

Better hydro conditions have prompted power generator Mercury to upgrade its earnings forecast for 2026, while medical products distributor Ebos has downgraded its forecast because of rising fuel costs.

Mercury said it now expects its earnings before interest, tax, depreciation, amortisation and fair value adjustments (ebitdaf) to come in at $1.05 billion in the June year, up from its previous guidance of $1.0b.

“This reflects disciplined portfolio management and higher forecast renewable generation from hydro and new generation,” the company said.

For its 2025 financial year, Mercury reported a net profit of just $1 million, down $289m from the prior year, primarily because of lower ebitdaf and changes in unrealised gains/losses on unhedged electricity derivatives.

Mercury’s 2025 ebitdaf was $786m, down $91m from the prior year.

In today’s third-quarter update, Mercury said its Ngā Tamariki geothermal station OEC5 successfully opened and had completed a reliability run.

The new unit is on time and on budget and expected to increase the site generation by 390 gigawatt hours per annum and net output by 46 megawatts.

For the quarter, Mercury reported a trading margin of $325m, up 27% on the previous comparable period.

“The quarter also reflects continued delivery across our renewable development and asset-renewal programmes, with important milestones achieved at Ngā Tamariki, Kaiwera Downs and in hydro refurbishment,” it said.

In its update, Ebos Group said elevated fuel prices and broader energy cost pressures had affected its 2026 earnings outlook.

“Fuel prices have increased materially in recent months, driven by global supply dislocation and heightened geopolitical risks,” Ebos said.

“In addition, there is a lesser impact on the price of hydrocarbon-related consumable products, for example, plastic wrapping and polystyrene foam.”

This had resulted in higher direct transport, consumables and logistics costs across the group’s operations, particularly within its distribution-intensive businesses.

While underlying demand across the group remained stable, the pace and extent of fuel and consumables cost increases during the second half of 2026 had exceeded the group’s previous assumptions.

Ebos and its businesses, particularly Symbion, were actively engaged with relevant stakeholders, including the Australian Government, in relation to fuel cost recovery.

The group now expects 2026 underlying ebitda of about $610–$620m, compared with its previous guidance of $615–$635m.

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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