Mercury NZ Ltd

MCY: XASX (AUS)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	A$7.23	Pmwwks	Rgkpzqcjh

Mercury NZ Earnings: Dry Weather Caps Profit Growth Despite Higher Electricity Prices

Adrian Atkins

Aug 20, 2024

Narrow-moat-rated Mercury NZ posted modest earnings growth in fiscal 2024. EBITDA rose 4% to NZD 877 million as lower hydroelectric generation volumes and higher operating costs largely offset higher customer prices. Guidance for fiscal 2025 EBITDA of NZD 820 million disappoints, a 6% fall on 2024 with dry weather hampering hydroelectric output and high gas supply costs. We downgrade our forecast by 10% to align with guidance. However, these factors should prove temporary as weather normalizes and the importance of gas-fired power stations diminishes as new renewables come online.

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