Mercury Energy first half profit slips

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Mercury Energy had brought new wind farms on stream which had helped to offset weaker hydro-generation, its chief executive says.
Photo: 123rf

Mercury Energy’s first half profit has slipped on higher costs and one off items, as the company said it would press on with several renewable energy projects

Key numbers for the six months ended December compared with a year ago:

Net profit $174m vs $239m
Revenue $1.6b vs $1.3b
EBITDAF* $434m vs $451m
Interim dividend 9.3 cents per share vs 8.7 cps

* EBITDAF – earnings before interest, tax, depreciation, amortisation, and fair value movements — a measure of operating earnings.

Mercury chief executive Vince Hawksworth said the company had done well to sustain its operating earnings and revenue given the previous year’s strong hydro generation.

He said the company had brought new wind farms on stream which had helped to offset weaker hydro-generation, raised prices, and was investing in new projects.

“The renewable energy sector is undergoing transformational growth, and we are part of that change.”

He said Mercury was committed to spending up to $1 billion this financial year on renewable projects that will start generating power over the next two to three years, and was making progress on two of them — a new unit at a Bay of Plenty geothermal station, and a new wind farm in Southland.

A further wind farm in Northland would be delayed by a year, but the company was now investigating solar power.

“We see this as an important step towards further diversification of our renewable energy portfolio, and a meaningful way to support the role independent generators play in New Zealand’s energy market,” Hawksworth said.

Mercury is to raise prices in April because of rising costs, and said it expected prices to stay high in the short term, because of uncertain hydro lake levels, delays in getting new generation up and running, and growth in demand.

In the longer term prices were expected to decline as commitments were made for new renewable projects.

Hawksworth said the new government’s decision to scrap the Lake Onslow project was welcome but there was a need for clarity on the role of gas, a clear consenting regime, demand-side policies and network and transmission investment.

The company raised its forecast full year operating earnings (EBITDAF) to $880m from $835m on the back of higher prices.