Mercury Nz Ltd. · NZX:MCY
Mercury Nz — HY2024 Earnings Presentation
23 slides from Mercury Nz's earnings presentation, Feb 20, 2024
Slide 1: 20 Interim Results: Six Months Ended 31 December 2023
For personal use only 20 INTERIM RESULTS Six Months Ended 31 December 2023 24 VINCE HAWKSWORTH WILLIAM MEEK PAUL RUEDIGER Chief Executive Chief Financial Officer Head of Business Performance & Investor Relations 20 February 2024
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 Produced 4.5TWh of renewable generation Committed to the OEC5 expansion of Ngā in HY24 with both Turitea and Kaiwera Tamariki geothermal station. The expansion OPERATIONS Downs
Slide 4: Health, Safety & Wellbeing
HEALTH, SAFETY & WELLBEING. Continued focus on Health, Safety and Wellbeing Key messages For personal use only • We are focused on increasing our safety maturity and 1.5 3 growing the capability of our people and systems to enable safe and healthy outcomes • Our safety critical risk programme addres
Slide 5: Financial – strong performance coming off record hydro generation
FINANCIAL – STRONG PERFORMANCE COMING OFF RECORD HYDRO GENERATION. Performance benefited from diversified generation portfolio For personal use only 700 HY2024 618 604 600 HY2023 500 434 451 400 345 $m 283 300 239 191 174 200 160 129 120 100 60 70 44 31 0 Trading Margin Operating EBITDAF NPAT Operat
Slide 6: Financial – sales yields and new wind generation lift earnings
FINANCIAL – SALES YIELDS AND NEW WIND GENERATION LIFT EARNINGS. EBITDAF bridge (HY23 to HY24) Decrease Increase For personal use only 500 450 (28) 33 (11) 20 (31) 400 350 EBITDAF ($m) 300 250 451 434 200 150 100 50 - HY23 Generation Physical Electricity Price incl Operating HY24 volume sales derivat
Slide 7: Financial – investing in future growth
FINANCIAL – INVESTING IN FUTURE GROWTH. Continued investment in growth and existing assets For personal use only 200 500 5 (93) 15 8 3 400 160 (181) 300 120 Opex ($m) 434 $m 191 200 (60) 80 160 (157) 100 40 0 (19) (76) - -100 HY23 Retail Retail Asset Other cost HY24 EBITDAF Tax Investing Interest Di
Slide 8: Strategic – high quality generation pipeline
STRATEGIC – HIGH QUALITY GENERATION PIPELINE. Kaiwera Downs 2 in advanced stages of FID approval Key messages For personal use only Project Capacity Generation Type & Stage Progress Comment • Well advanced to reach FID in FY24 of the stage two (MW) (GWh pa) Location Kaiwera Downs wind farm. Site opt
Slide 9: Strategic – strong generation development performance
STRATEGIC – STRONG GENERATION DEVELOPMENT PERFORMANCE. PROJECTS UNDER CONSTRUCTION OR CONSENTED For personal use only Kaiwaikawe (wind) OUR TRACK RECORD 74MW, 220GWh Turitea South wind farm fully operational in FY23, Ngā Tamariki OEC5 (geothermal) increasing annual generation on average by 370GWh 46
Slide 10: 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 was commissioned in 2013 and currently comprises four Ormat Energy Converter (OEC) units providing a net station capacity of 86MW.
Slide 11: Strategic – leading the way in construction of wind generation
STRATEGIC – LEADING THE WAY IN THE CONSTRUCTION OF WIND GENERATION. Kaiwera Downs stage 1 wind farm fully operational Key messages For personal use only • New stage one wind farm generation completed at Kaiwera Downs on time and under budget • Stage one is a ten turbine 43MW wind farm with annualise
Slide 12: Strategic – New Zealand's leading multi-product utility
STRATEGIC – NEW ZEALAND'S LEADING MULTI-PRODUCT UTILITY. Customers migrated to a single technology stack Key messages For personal use only Lower acquisitions to • The programme of work to migrate Mercury brand mass National Switching manage migration market customers to the Gentrack billing system
Slide 13: Strategic – electrification opportunity is significant
STRATEGIC – ELECTRIFICATION OPPORTUNITY IS SIGNIFICANT. Renewable electricity supply to increase 30TWh by 2050 Key messages For personal use only • Renewable electricity to account for 58% of New Zealand’s total energy demand in 2050. This will require a further 30TWh of new renewable electricity fr
Slide 14: Operational – electricity three year forward prices stabilised
OPERATIONAL – ELECTRICITY THREE YEAR FORWARD PRICES STABILISED. Forward prices stable despite pipeline growth Key messages For personal use only Electricity Futures Three Year Forward Price1 250 200 • Electricity futures three year forward price stable over HY24, this is partly a result of higher sh
Slide 15: Operational – Taupō storage providing a strong portfolio position
OPERATIONAL – TAUPŌ STORAGE PROVIDING A STRONG PORTFOLIO POSITION. LAKE TAUPŌ STORAGE Min Avg Lake Taupo MCL FY2023 FY2024 (since 1 Jul 1999) For personal use only 600 500 400 GWh 300 200 100 0 Month End Jul Aug Sep Oct Nov Dec Jan Feb5 Mar Apr May Jun Hydro Generation - 22 47 -112 -58 -24 -17 33 16
Slide 16: Operational – geothermal drilling underway with delays
OPERATIONAL – GEOTHERMAL DRILLING UNDERWAY WITH DELAYS. Geothermal drilling programme rephased Key messages For personal use only • The 14 month, 8 well, geothermal drilling campaign commenced in June 2023 to sustain capacity of the Kawerau, Ngā Tamariki and Rotokawa fields, offsetting the natural d
Slide 17: Operational – enhancing and optimising existing generation assets
OPERATIONAL – ENHANCING AND OPTIMISING OUR EXISTING GENERATION ASSETS. First phase of centralising geothermal control complete Key messages For personal use only • First phase of centralising the geothermal control room operations implemented, with Ngā Tamariki and Ngā Awa Pūrua control combined ons
Slide 18: Operational – platform for connection growth through integration
OPERATIONAL – PLATFORM FOR CONNECTION GROWTH THROUGH INTEGRATION. Total connections across all products increased 17k Key messages For personal use only 1,000 • Retail integration has reshaped Mercury into a scaled Total Connections ('000) 800 168 172 174 130 128 161 162 100 102 102 multi-product ut
Slide 19: Financial – strong balance sheet supports further investment
FINANCIAL – STRONG BALANCE SHEET SUPPORTS FURTHER INVESTMENT. Forecast Debt/EBITDA provides platform for growth Key messages For personal use only 3 • Debt/EBITDA1 at 2.0x for FY24, consistent with FY23 • Capital structure flexibility enables growth • S&P Global re-affirmed Mercury’s credit rating o
Slide 20: 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 500 400 300 $m 200 100 0 2024 2025 2026
Slide 21: Financial – FY24 guidance updated
FINANCIAL – FY24 GUIDANCE UPDATED. FY24 EBITDAF guidance updated to $880m on mean hydro generation (4,067GWh) subject to hydrological volatility, For personal use only wholesale market conditions and any material adverse events, significant one-off expenses or other unforeseeable circumstances • FY2
Slide 22: Summary – key messages
SUMMARY – KEY MESSAGES. First half summary Outlook for the second half For personal use only • 390GWh Ngā Tamariki geothermal station expansion • 525GWh per annum stage 2 wind farm at Kaiwera was announced and construction is underway Downs in advanced stages of approval • 147GWh per annum Kaiwera D
Slide 23: Q&A
Q&A For personal use only Maraetai 1 and 2 23