17 Aug 2021

Dry weather and plant outages cuts Mercury full year profit by third

11:25 am on 17 August 2021

Mercury has shown shown resilience in the face of challenges dogging the energy sector, says chief executive Vince Hawksworth.

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Photo: RNZ / Russell Palmer

  • Net Profit down 32.5 percent from $207 million to $141m.
  • Revenue rose 15.7 percent to $2.05 billion.
  • EBITDAF (Pre-tax profit) $463m, down from $494 million.
  • Full year dividend of 17 cents per share, compared to 15.8 cents per share in FY 20.

The company's bottom line was once again effected by dry weather, as hydro storage around the country fell to its lowest point since 1996 in April.

Hydro generation was down about 10 percent on the company's long term average. The problem was exacerbated when a mechanical fault sidelined its Kawerau geothermal plant for about two weeks in June.

Overall generation declined by 2 percent over the year.

"The financial impact of this loss of generation was more acute than previous years due to historically high spot prices as a consequence of low national fuel (hydro and gas) availability," the company said.

Challenges aside, it had been a significant year for the company after it acquired the local assets of Tilt Renewables for nearly $800m and purchased Trustpower's retail business for $441m.

Hawksworth said the acquisition of Tilt Renewables' assets will increase Mercury's total annual generation by over 1,100 giggawatt hours.

"Bringing together the retail businesses of Mercury and Trustpower will also give us the scale to make meaningful investment in the underlying IT systems, driving greater innovation for our customers," he said.


Mercury chair Prue Flacks said the energy market was taking steps to transition away from fossil fuels, with about $1.5bn of investment committed by the industry on the construction renewable generation projects.

"However, the current market conditions illustrate the challenge of ensuring the right balance is struck between investment in decarbonisation, security of supply, and ensuring energy is affordable."

She said that policy certainty is needed from the government to send right signals to the market.

"One wind farm a year is required to be built to achieve net zero carbon emissions by 2050. Delivering that outcome, while maintaining security and affordability should be foremost in the government's mind."


Mercury's underlying profit guidance for the current financial year was $590m, a 27 percent on its FY21 result.

This was based on the contributions of its newly acquired generation assets from Tilt Renewables and its soon to be opened Turitea wind farm.

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