Mercury Nz Ltd. · NZX:MCY
Mercury Nz — HY2025 Earnings Presentation
29 slides from Mercury Nz's earnings presentation, Feb 25, 2025
Slide 1: Six Months Ended 31 December 2024
For personal use only Six Months Ended 31 December 2024 STEWART HAMILTON WILLIAM MEEK PAUL RUEDIGER Chief Executive Chief Financial Officer Head of Business Performance & Investor Relations 25 February 2025
Slide 2: Disclaimer
DISCLAIMER. This presentation has been prepared by Mercury NZ Limited and its group of companies (“Company”) for informational purposes. This disclaimer applies to this document and the verbal or written comments of any person presenting it. Information in this presentation has been prepared by the
Slide 3: Mercury takes leading role in New Zealand's energy transition
MERCURY TAKES LEADING ROLE IN NEW ZEALAND’S ENERGY TRANSITION. Business performance and major events For personal use only Robust performance in challenging conditions, Construction of Kaiwaikawe wind farm underway in with careful portfolio management mitigating Northland. OPERATIONS the impact of d
Slide 4: Key progress on strategic objectives during HY25
KEY PROGRESS ON STRATEGIC OBJECTIVES DURING HY25. On track with our three-year FY25 to FY27 objectives For personal use only Achieving what matters most through financial growth • Embedding operating model tracking to deliver on synergies • Increasing broadband and mobile connections Delivering more
Slide 5: Our People
OUR PEOPLE. Continued focus on Health, Safety and Wellbeing % For personal use only 1.5 100 FY24 CAL-24 Target 80 75 72 1 60 60 46 49 45 40 0.5 21 21 20 0 0 FY18 FY19 FY20 FY21 FY22 FY23 FY24 CAL-24 Women In Internal Mobility People Leaders Mercury's Cultural TRIFR High Severity Incidents Leadership
Slide 6: Mercury pursuing growth over HY25, despite challenging conditions
MERCURY PURSUING GROWTH OVER HY25, DESPITE CHALLENGING CONDITIONS. HY25 Performance reflects lower generation volume For personal use only 605 618 HY2025 418 434 HY2024 283 207 191 227 174 $m 139 134 129 73 60 70 (67) Trading Margin Operating EBITDAF NPAT Operating Cash Flow Stay-In-Business Growth
Slide 7: Financial – Robust performance in challenging conditions
FINANCIAL – ROBUST PERFORMANCE IN CHALLENGING CONDITIONS. EBITDAF bridge (HY24 to HY25) Decrease Increase For personal use only (45) 20 (7) (2) 3 (16) 27 EBITDAF ($m) 434 418 HY24 Generation C&I Mass market Gas Trading Price Operating HY25 volume sales sales expenses HY25 Financial Performance • Gen
Slide 8: Financial – Investing in future growth
FINANCIAL – INVESTING IN FUTURE GROWTH. Continued investment in growth and existing assets (194) For personal use only 6 4 2 4 (163) Opex ($m) 418 191 207 (140) $m (60) (140) (1) HY24 Employee Generation Brand and Other Costs HY25 EBITDAF Investing Dividends Tax Interest Other Increase in Costs Proj
Slide 9: Financial – Capex enhancing geothermal resilience and hydro capacity
FINANCIAL – CAPEX ENHANCING GEOTHERMAL RESILIENCE AND HYDRO CAPACITY. Geothermal drilling lifted HY25 SIB capex For personal use only 3 3 SIB Capex ($m) SIB Capex ($m) 7 73 60 26 13 17 13 4 HY24 Geothermal Hydro Taupo Control HY25 Geothermal Hydro Other Generation Taupo Control Enterprise and drilli
Slide 10: Context - Taupō storage managed when spot prices low in Q2
CONTEXT - 1H TAUPŌ STORAGE MANAGED WHEN SPOT PRICES LOW IN Q2. • HY25 15th percentile Waikato catchment hydro inflows For personal use only • FY25 YTD 6th percentile Waikato catchment hydro inflows 600 LAKE TAUPŌ STORAGE (since 1 Jul 1999) Min / Max Avg Lake Taupo MCL FY2024 FY2025 500 400 GWh 300 2
Slide 11: Context - 2024 high prices collapsed after market response and hydrology
CONTEXT - 2024 HIGH PRICES COLLAPSED AFTER MARKET RESPONSE AND HYDROLOGY. Demand Growth vs PCP (28-day rolling) Gas Production (growth vs pcp, 28-day rolling) NZ Daily Average Generation by Type For personal use only Total Tiwai Only 10% SI Hydro NI Hydro Geothermal Wind 10% Thermal Cogen Solar Ther
Slide 12: Context - Focus now shifting to energy security for winter 2025
CONTEXT - FOCUS NOW SHIFTING TO ENERGY SECURITY FOR WINTER 2025 AND BEYOND. Multiple responses to 2024 energy shortage Key messages For personal use only Actual Est. • Low hydro storage occurred Aug-24, after the higher risk period mid Cal-24. Strong market responses from sector participants helped
Slide 13: Context - Market and regulatory evolution to support the transition
CONTEXT - MARKET AND REGULATORY EVOLUTION TO SUPPORT THE TRANSITION. Policy and regulatory settings need to support the pace Key government regulatory reviews are underway with the Ministerial For personal use only and scale of investment needed to deliver the energy review of electricity market per
Slide 14: Context - Sustainability improving, energy security experiencing challenges
CONTEXT - SUSTAINABILITY IMPROVING, ENERGY SECURITY EXPERIENCING CHALLENGES. Rolling 12-month market share by generation type Key messages For personal use only 100% 90% 80% Renewable generation • Environmental sustainability of NZ’s electricity market is 70% trending towards 90% high. Renewable gen
Slide 15: Context - Leaning into New Zealand's dry year energy security challenge
CONTEXT - LEANING INTO NEW ZEALAND’S DRY YEAR ENERGY SECURITY CHALLENGE. Coal is the only feasible primary thermal fuel to 2027 Key messages For personal use only • Market participants delivered a range of initiatives in recent years to improve energy security including new renewables, Primary Fuel
Slide 16: Strategic – $1B investment and over 1.1 TWh of renewables under construction
STRATEGIC – $1B INVESTMENT AND OVER 1.1 TWH OF RENEWABLES UNDER CONSTRUCTION. Key messages For personal use only • $1 billion and 1,136 GWh of renewables under construction 2,500 New and committed generation (GWh) across 3 major generation projects - Ngā Tamariki OEC5 geothermal, Kaiwera Downs stage
Slide 17: Strategic - High quality generation pipeline
STRATEGIC - HIGH QUALITY GENERATION PIPELINE. Kaiwaikawe wind farm progressed to construction phase Key messages For personal use only Capacity Generation Type & Project Stage Progress Comment (MW) (GWh pa) Location Ngā Tamariki Geothermal • Construction of Ngā Tamariki OEC5 geothermal 46 390 uplift
Slide 18: Strategic – Expansion of high-quality geothermal generation
STRATEGIC – EXPANSION OF HIGH-QUALITY GEOTHERMAL GENERATION. First generation expected late calendar 2025 Key messages For personal use only • Ngā Tamariki power station consists of four Ormat Energy Converter (OEC) units providing a net station capacity of 86MW. In Sep-23, the $220 million OEC5 uni
Slide 19: Strategic – Leading the way in the construction of wind generation (Kaiwera Downs)
STRATEGIC – LEADING THE WAY IN THE CONSTRUCTION OF WIND GENERATION. Kaiwera Downs stage 2 wind farm under construction Key messages For personal use only • Construction of Kaiwera Downs 2 wind farm expansion started in Jun-24. Construction is proceeding as scheduled despite a few wet months over spr
Slide 20: Strategic – First wind farm to be constructed in Northland
STRATEGIC – LEADING THE WAY IN THE CONSTRUCTION OF WIND GENERATION. First wind farm to be constructed in Northland Key messages For personal use only • Kaiwaikawe is a 12 turbine 77MW wind farm near Dargaville, with annualised generation of 221GWh. Construction costs of $287m brings Mercury’s total
Slide 21: Operational – Geothermal drilling accelerated
OPERATIONAL – GEOTHERMAL DRILLING ACCELERATED. Geothermal drilling programme rephased Key messages For personal use only • The 8 well geothermal drilling campaign continues to sustain capacity of the Kawerau, Ngā Tamariki and Rotokawa fields, offsetting the natural decline of well performance • We h
Slide 22: Operational – Rehabilitation programme for hydro assets
OPERATIONAL – REHABILITATION PROGRAMME FOR HYDRO ASSETS. Karāpiro station capacity already increased by 10MW Key messages For personal use only • The Karāpiro project remains on schedule with the second unit completed in Sep-24 • The third and final unit was removed from service in Oct-24 and due to
Slide 23: Customer – Focus on telco cross-sell opportunities post integration
CUSTOMER – FOCUS ON TELCO CROSS-SELL OPPORTUNITIES POST INTEGRATION. Total of 888k connections across all products Key messages For personal use only 1,000 800 168 172 184 193 199 • Our scaled retail business increased to 888k customer Total Connections ('000) 161 162 174 177 128 102 connections, 33
Slide 24: Customer – The journey to becoming a leading multi-product retailer
CUSTOMER – THE JOURNEY TO BECOMING A LEADING MULTI-PRODUCT RETAILER. Mercury named 2024 energy retailer of the year Key messages For personal use only • Mercury was named Energy Retailer of the Year at the 2024 New Zealand Energy Excellence Awards. This award recognises the significant amount of act
Slide 25: Customer electricity pricing tracking back to long term inflation
CUSTOMER ELECTRICITY PRICING TRACKING BACK TO LONG TERM INFLATION. Residential electricity has tracked below inflation Key messages For personal use only RESIDENTIAL PRICE • Total residential electricity price has tracked at lower than Lines component Energy and other component inflation. From Apr-2
Slide 26: Financial – Diversified funding profile
FINANCIAL – DIVERSIFIED FUNDING PROFILE. For personal use only Commercial Paper Undrawn Bank Facilities Undrawn Rolling Bank Facilities 1 Drawn Bank Facilities US Private Placement AUD Green Bonds Capital Bonds Domestic Wholesale Green Bonds Retail Green Bonds 600 500 400 $m 300 200 100 0 2025 2026
Slide 27: Financial – Strong balance sheet supports growth
FINANCIAL – STRONG BALANCE SHEET SUPPORTS GROWTH. Forecast Debt/EBITDA provides platform for growth Key messages For personal use only 3 • Mercury targets Debt/EBITDA between 2x-3x after adjusting for S&P Global treatment, consistent with our BBB+ rating Net Debt ($b) and Debt/EBITDA • Debt/EBITDA1
Slide 28: Financial – FY25 guidance
FINANCIAL – FY25 GUIDANCE. FY25 EBITDAF guidance unchanged at $820m on 3,550GWh of hydro generation subject to hydrological volatility, wholesale market conditions and any material adverse events, significant one-off expenses or other unforeseeable circumstances For personal use only • Lower forecas
Slide 29: Q&A
Q&A For personal use only Maraetai 1 and 2 29