Mercury NZ Limited (NS) Analysis

Overview

Mercury (formerly Mighty River Power - NZX: MRP) is a company with a long heritage in renewable energy in New Zealand serving about 1-in-5 homes and businesses under the Mercury brand and other specialty brands, including the leading pre-pay product GLOBUG. Mercury also has proven capability and technical expertise in smart metering services and solar.

Mercury's electricity generation is 100% renewable, with the hydro and geothermal power stations operated by Mercury producing enough renewable electricity for about 1 million New Zealand homes. The nine hydro stations dating back to the 1920s make up the Waikato River Hydro System, accounting for about 10% of the country's total electricity supply that is predominantly hydro.

Mercury led a renaissance in geothermal energy over the past decade with an innovative investment programme in partnership with local Maori landowners, enabling the completion of three major geothermal projects in 2008 (Kawerau), 2010 (Nga Awa Purua) and 2013 (Ngatamariki). These sustainably harness natural heat deep underground, producing steady 'base-load'electricity - normally running 24/7 and are not dependent on the weather like other forms of renewable generation.

The company has established a leadership position in encouraging the electrification of transport, supporting the adoption of e-bikes and electric vehicles, partnering on charging infrastructure and moving 70% of the company's vehicle fleet to plug-in by 2018.

Mercury was publicly listed on the New Zealand and Australian stock exchanges in May 2013 with a large New Zealand ownership base, alongside the Government as majority owner. The company was renamed Mercury NZ Limited (NZX: MCY) on 29 July 2016.

Performance

The following information was extracted from Mercury NZ Limited's Full year results, released 19 August 2025

FY25 financial overview

Total generation volume for the year was 7,906GWh, 10% lower on the prior year. This was largely driven by reduced hydro generation, 17% lower at 3,410GWh – the 4th lowest for the Waikato scheme since 1980. Wind generation was 6% lower at 1,936GWh due to lower wind speeds. Meanwhile, geothermal generation was 2% lower at 2,559GWh due to planned outages.

Mercury reported a net profit after tax of $1 million, down $289 million from the prior year, primarily due to lower EBITDAF and changes in unrealised gains/losses on unhedged electricity derivatives. EBITDAF was $786 million, down $91 million from the prior year. This was mostly driven by the short net position and high electricity prices.

Operating costs increased by $11 million on the prior year, primarily due to increases in generation maintenance and organisation change costs to enable future cost savings. Stay-in-business capital expenditure (CAPEX) was broadly consistent with the prior year, down $4 million at $138 million, with good progress made on Mercury’s geothermal drilling campaign. Meanwhile, growth CAPEX was up $193 million on the prior year to $347 million with the second stage of Kaiwera Downs and Kaiwaikawe Wind Farms beginning construction.

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