Meridian Energy Limited (NS) Analysis

Overview

As the country's main electricity generator and a significant retailer, Meridian is New Zealand's largest electricity company.

Meridian generates electricity from 100% renewable sources wind and water. The company generates approximately 30% of New Zealands electricity from its integrated chain of dams on the Waitaki River and Manapouri, which is the largest hydro power station in New Zealand, and four wind farms around the country.

Through the Meridian and Powershop brands, the company retails electricity to over 270,000 customer connections, including homes, businesses and farms around the country.

The company is committed to renewable energy and supporting the environments and communities where it operates. Meridian continues to focus on providing energy solutions that can help customers manage their energy use.

Meridian was incorporated in 1998 and began business in 1999, when Electricity Corporation of New Zealand Limited was split into three separate state enterprises: Meridian, Genesis and Mighty River. In this process, Meridian was allocated various South Island hydro assets. The company was listed on the NZX in October 2013 as part of the Governments Share Offer Programme. The Government retains 51% ownership of Meridian.

MEL has been granted Listing with a 'Non-Standard' ("NS") designation. This designation was granted because of provisions in MEL's constitution regulating the ownership and transfer of its Ordinary Shares due to the New Zealand government's shareholding. For further information, please see a copy of the waiver under Documents on Merdians' homepage on nzx.com

Performance

The following information was extracted from Meridian Energy Limited's full year results, released 28 August 2024:

Meridian lifts financial performance and lays foundation for future growth

Meridian Energy has reported operating cash flows of $667 million for the year ending 30 June 2024, up from $509 million the previous year, with net profit after tax up from $95 million to $429 million. The growth in net profit after tax was influenced significantly by net gains on hedge instruments of $249 million in the 2024 financial year. In the prior year the company recorded net losses on hedge instruments of $351 million.

EBITDAF1 was up 16% to $905 million and underlying net profit2 rose 14% to $359 million. Both of these are non-GAAP measures.

“This is a strong and improved operating result that allowed us to invest $349 million in new and existing generation assets during the year,” says Chief Executive Neal Barclay. The Board declared a final ordinary dividend of 14.85 cents per share. This brings the total ordinary dividends declared in FY24 to 21.00 cents per share.

The Board has approved the continuation of the Dividend Reinvestment Plan at a 2% discount.

The company notes that, while the operating result for the last financial year was strong, the operating environment shifted dramatically during May as a drought emerged. Inflows into Meridian’s hydro catchments from May 2024 through to mid-August 2024, have been the lowest on record and, as a result, the 2025 financial year currently looks to be far more challenging.