Contact Energy Limited Analysis

Overview

Contact Energy was formed in February 1996 when it acquired electricity generation and gas assets from state-owned electricity generator ECNZ. Subsequent expansion put the company in the forefront of electricity generators in NZ. It is strongly positioned in wholesale gas distribution, gas retailing and electricity retailing.

Performance

The following information was extracted from Contact Energy Limited's Full year results, released 18 August 2025

Financial performance

Contact Energy Limited (Contact) has today reported net profit of $331 million in FY25 and operating earnings (EBITDAF) of $872m. Reported figures include a release of the Ahuroa Gas Storage facility (AGS) onerous contract provision of $98 million within EBITDAF ($71 million within net profit after tax). The release, which takes the onerous contract provision to nil, is a non-cash movement reflecting improved confidence in the ability to access storage capacity and the rising value of thermal flexibility.

Excluding the release, underlying net profit is up 13 percent on FY24 to $261 million and EBITDAF is up 17% to $774 million.iv Contact’s operating result was underpinned by a 34 percent uplift in geothermal generation, effective use of risk management assets and contracts and better alignment of long-term sales to the market price of electricity.

Hydro volatility characterised operating conditions in FY25, and gas supply continued to tighten, with domestic production down more than 20 percent over the last calendar year. Together, these conditions impacted wholesale pricing as more expensive thermal generation was required to cover the reduction in hydro generation in the market.

Contact contracted additional short-term gas from Methanex and utilised its flexible gas storage capacity at AGS to support gas-backed electricity supply. As a result, Contact was positioned to provide risk management support to other market participants, with sales of Contracts for Difference (CFDs) 0.5TWh above plan in FY25.

Operating free cash flow of $434 million is up two percent on the prior year driven by improved operating performance and reduced stay-in-business capex. These improvements were partly offset by relatively higher levels of working capital (due to higher value and levels of stored gas) and higher interest paid (due to reduced interest capitalisation following the completion of Tauhara). In FY25, growth capital expenditure was $363 million as Contact invested its entire reported net profit for the year into renewable development projects.