Customer default sinks Manawa Energy forecast, share price falls

Manawa Energy expects a sharply weaker annual result after a customer default.

Manawa Energy, formerly Trustpower, has said it now faces a sharply lower earnings forecast for the 2025 year after one of its customers defaulted on a payment.

Lower power generation conditions would also hit earnings, Manawa - the country’s fifth-biggest power generator - said.

Manawa now expects earnings before interest, tax, depreciation, amortisation and financial instruments (Ebitdaf) for the March 2025 year to be in a range of $95-115 million. This compares to the previous earnings guidance provided in May of $130-150m.

Infratil, which owns 51% of Manawa, has adjusted its forecasts accordingly.

The infrastructure investor now expects its adjusted 2025 proportionate operational Ebitdaf to be in a range of $962-1012m, down from $980-1030m previously.

Manawa Energy went into an NZX trading halt yesterday while it revised its forecasts.

When trading resumed this morning, the stock was down by 42c or 9.8% at $3.86.

About half of the change in the earnings guidance was due to the provision for the potential bad debt, Manawa said.

The company acts as a wholesale intermediary for an electricity retailer, which was in default of its payment terms with Manawa.

“As a result, it has become necessary for Manawa to provision for a potential bad debt on this contract,” it said.

Manawa said the arrangement was unique within Manawa - it does not have similar arrangements with any other party.

“Manawa will today terminate the electricity supply and services agreement with the electricity retailer.

“This will allow Manawa to immediately initiate steps to reduce the risk of further exposure,” the company said.

Manawa will work to recover as much of the outstanding debt as possible.

Separately, Manawa said it was also being impacted by electricity market conditions.

“In particular, the extended dry and calm sequence experienced for a number of months is having a significant impact on the generation volumes from Manawa’s hydroelectricity schemes and is also reducing the electricity volumes provided to Manawa under the wind power purchase agreements,” it said.

“Purchases of any energy shortfalls to meet its contractual supply commitments are occurring at extremely elevated prices relative to historic norms,” it said.

The company owns 26 hydropower schemes nationally, with a total installed capacity of 498 megawatts.

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