Mercury NZ Limited (NZX: MCY) Mercury’s Earnings Up, Generation Down

Tuesday 23rd February 2021

Mercury results for the half year ended 31 December 2020 showed lifts across all key financial measures due to careful management of generation and retail portfolios, astute contract trading and ongoing cost control. This was achieved despite lower hydro generation.

Chief Executive Vince Hawksworth said Mercury had demonstrated resilience faced with ongoing COVID-19 uncertainty, sustained elevated wholesale and futures price for electricity and a highly competitive environment.

With such conditions forecast to continue, Mercury is pressing forward with changes to deliver ongoing success.

INTERIM DIVIDEND

Mercury Chair Prue Flacks announced the Board has declared a fully imputed interim dividend of 6.8 cents per share payable to our more than 75,000 owners including the Crown. This represents an increase of 6% on the HY20 dividend and equates to 40% of the guided full year normal dividend of 17.0 cents per share.

The dividend will be paid on 1 April 2021.

OUTLOOK

Mercury has reinvigorated its focus on continuous improvement with an in-house review of opportunities to work smarter, faster and to set us up to thrive in the future. Embedding and delivering on a culture of improvement is seeking to deliver a $30m EBITDAF benefit in FY22.

The ability to plan for an orderly exit of the Tiwai aluminium smelter has been a positive development. Mercury remains relatively well positioned for this eventuality with its sources of renewable electricity generation located close to key areas of demand.

The Climate Change Commission’s draft report in February presents a number of opportunities, with renewable electricity seen as key driver to decarbonising the New Zealand economy.

GUIDANCE

Mercury’s FY21 EBITDAF guidance has been revised from $535 million to $520 million. This reflects an expected 100GWh decrease in full year hydro generation to 3,800 GWh due to dry weather in the Taupō catchment since mid-January and ASX electricity futures indicating wholesale prices will remain elevated for the remainder of the financial year.

Guidance may change and remains subject to any material events, significant one-off expenses or other unforeseen circumstances including changes to hydrological conditions.

FY21 stay-in-business capital expenditure guidance has also been revised from $80 million to $70 million with the deferral of non-urgent investment.

FY21 ordinary dividend guidance remains at 17.0 cents per share representing a 7.6% increase on FY20 and the 13th consecutive year of ordinary dividend increases.

Please see the links below for details:

Results Announcement HY2021

News Release

Results Presentation

2021 Interim Report including unaudited financial statements and Auditor's Review Report

Distribution notice HY2021

Source: Mercury NZ Limited

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