Contact Energy Limited · NZX:CEN
Contact Energy — H1 FY2025 Earnings Presentation
47 slides from Contact Energy's earnings presentation, Feb 17, 2025
Slide 1: 2025 interim results presentation
2025 interim results presentation Six months ended 31 December 2024 17 February 2025 1
Slide 2: Disclaimer and important information
Disclaimer and important information This presentation contains summary information and statements about Contact and its EBITDAF, free cash flow and operating free cash flow are financial measures that are businesses and activities as at the date of this presentation. The information is not held “no
Slide 3: Presenting today
Presenting today Mike Fuge Matt Forbes Chief Executive Officer Chief Financial Officer (Acting) 3
Slide 4: Agenda
Agenda 1 1H25 highlights / Mike Fuge, CEO 5 - 13 2 Market context / Mike Fuge, CEO 15 - 18 3 Financial results and outlook / Matt Forbes, Acting CFO 20 - 32 4 Supporting materials 35 - 47 4
Slide 5: FY25 highlights to date
FY25 highlights to date Glenbrook BESS Investment confirmed Taranaki Te Huka III Te Mihi Stage 2 Combined Cycle Construction underway on 51MW geothermal power 101MW geothermal power station gas plant made 100MW grid-scale battery station online and Wairakei extension available for 2025 Continued Con
Slide 6: Executive team changes
Executive team changes Contact Energy has announced several key executive changes Chris Abbott Mike Fuge Chief Corporate Affairs Chief Executive Officer Officer Key Updates • Development and Major Projects Jack Ariel Jan Bibby roles consolidated. Major Projects Director Chief People Experience (Reti
Slide 7: Delivering renewable investment while supporting security of supply
Summary of key financial performance measures Delivering renewable investment while supporting security of supply Market Six months ended 31 Six months ended 31 December 2024 (1H25) December 2023 (1H24) 1H25 was characterised by hydro inflow and wholesale electricity Contact took a range of proactiv
Slide 8: Key strategic highlights from 1H25
Key strategic highlights from 1H25 Grow Grow renewable Decarbonise Create outstanding demand development our portfolio customer experiences Attract new industrial demand with Build renewable generation and Lead an orderly transition to Create New Zealand's leading energy and Objective globally compe
Slide 9: 1H25 delivery supported by enablers
1H25 delivery supported by enablers Our ESG Operational Transformative commitment excellence ways of working Create long-term value through our strong Continuously improving our operations Create a flexible and high-performing Objective performance across a broad set of through innovation and digiti
Slide 10: Demand: Industrial process heat electrifies
Demand: Industrial process heat electrifies Uncertainty about fuel availability is accelerating the transition for customers currently using natural gas. Existing industrial customers are also adopting demand response as a means of lowering energy costs. Contact is helping to lead the charge with se
Slide 11: Renewable builds: Online and underway
Renewable builds: Online and underway Projects Online ~200,000 Equivalent homes powered ~60,000 Equivalent homes powered May 2024 $924m1 Dec 2024 $300m1 Online date Total Investment Online date Total Investment 174MW 1,450GWh 51MW 430GWh Estimated Annual Estimated Annual Installed Capacity Installed
Slide 12: Renewable builds: Next in line priority sites
Renewable builds: Next in line priority sites Focusing on advancing next development options Consent Panel Assessment lodged Convened underway Upper North Status Island generation benefits GWAP Glorit Solar FY26 180MWp 300GWh Glorit Strong fit Expected FID Estimated Estimated Annual with portfolio d
Slide 13: Regulatory focus: Transition to Net Zero 2050
Regulatory focus: Transition to Net Zero 2050 Contact’s focus on accelerating new renewable generation, flexible storage and customer-focused demand response solutions aligns with the political and societal imperative for the market to deliver a secure, low emissions, and renewable electricity marke
Slide 14: Market context
Market context 14
Slide 15: National electricity demand
Market demand National electricity demand NZAS demand response was called on to support dry market conditions, contributing to a reduction in national New Zealand electricity demand of ~2% on 1H24 (up ~0.4% normalised for NZAS) Regional 0% National electricity demand (TWh) change (%) Total national
Slide 16: Hydrology significantly impacted generation mix
Fuel supply Hydrology significantly impacted generation mix Hydro volatility highlights the role of thermal generation for security of supply; geothermal powers up Generation by type (TWh)1 National hydro storage Hydro generation was down 9.2% 21.2 21.4 20.9 on 1H24, as a result of historically 1H25
Slide 17: Forward wholesale pricing reflects gas cost and new-build costs
Wholesale market Forward wholesale pricing reflects gas cost and increasing cost of new-build renewables Short-term external factors that Demand down ~2% Wholesale and futures electricity pricing ($/MWh) can influence the market year on year.3 Changes as at 31 December 2024 Long-dated futures (>12 m
Slide 18: Differences in retail strategies apparent
Retail electricity market Differences in retail strategies apparent Electricity and lines costs continue to rise; pass-through cost increases to continue Change in customer electricity connections (000s) 2yr ICP delta (1000s) 2yr % change 31 December 2022 – 31 December 2024 • Competition remains int
Slide 19: Financial results and outlook
Financial results and outlook 19
Slide 20: Key themes from the financial results
Key themes from the financial results Two new geothermal plants online, Facilitated Methanex gas supply New long-term NZAS contract commenced Tauhara and Te Huka 3, delivering arrangement (~3.5PJ) to support 1 July 2024 on improved pricing – 0.6TWh the market through winter 2024 demand response imme
Slide 21: Profit of $142m for 1H25
1H25 results Profit of $142m for 1H25 EBITDAF up $70m (21%) on 1H24 underlying, reflecting an increase in renewable generation from Tauhara and Te Huka 3 during the period, the net impact of gas-backed CFDs and long-term contracts commencing Profit ($m) EBITDAF ($m) EBITDAF - incl AGS net provision
Slide 22: EBITDAF up by $70m on underlying 1H24
1H25 results: Segmental performance EBITDAF up by $70m on underlying 1H24 Business performance by segment Wholesale EBITDAF1 ($m) Retail EBITDAF ($m) Corporate / unallocated costs ($m) +109 -14 -24 466 6 Price recovery 22 168 358 53 0 -1 Electricity 46 2 -23 1 and network -25 cost inflation 10 3 1H2
Slide 23: Generation costs
1H25 results: Wholesale business Generation costs Costs up $53m driven by higher cost of thermal fuel and acquired generation plus Tauhara online Generation volumes Electricity generated or acquired (GWh) Electricity generated or acquired costs ($m) • Hydro generation of 1,952GWh was up on 1H24 (2%)
Slide 24: Wholesale contracted revenue
1H25 results: Wholesale business Wholesale contracted revenue The Methanex gas deal at the beginning of 1H25 was backed by an electricity supply agreement with Meridian leading to a significant increase in CFD sales volumes Contracted +168 • Fixed price variable volume electricity sales to the Retai
Slide 25: Wholesale trading and merchant revenue
1H25 results: Wholesale business Wholesale trading and merchant revenue Merchant generation revenue in 1H25 was Trading EBITDAF ($m) Long / short position (GWh) characterised by two distinct periods – Merchant generation • In Q1 Contact was broadly neutral on merchant sales volumes in a much higher
Slide 26: Retail business performance
1H25 results: Retail business Retail business performance Margins contract as wholesale electricity and lines costs rise faster than tariff; Contact gaining connections via time of use and multi-product offerings 1H24 1H25 Variance EBITDAF ($m) Other Retail margins have contracted, driven by sustain
Slide 27: Operating costs increase on inflation and growth
1H25 results: Operating costs Operating costs increase on inflation and growth Non-recurring & performance Other operating • $2m costs related to movement in performance-based accrued costs in line cost movement with year-to-date performance. ($m) • $1m nonrecurring costs relate to Wairakei extensio
Slide 28: Cash flow and capital expenditure
1H25: Cash flow Cash flow and capital expenditure Cash conversion for 1H25 impacted by higher EBITDAF, higher fuel inventory and higher interest payments • Higher underlying EBITDAF on greater alignment of channel prices to the wholesale market. • Working capital changes were $70m greater than in th
Slide 29: Growth capital expenditure
1H25 results: Growth capital expenditure Growth capital expenditure Growth capital expenditure in 1H25 reflects Contact’s continued commitment to renewable development • The Tauhara geothermal station has been generating since May 2024. Final commissioning activity was Growth capital expenditure – c
Slide 30: Strong balance sheet
1H25 results: Key balance sheet metrics Strong balance sheet Supporting Contact’s growth with diverse sources of funding with strong green credentials Borrowing maturities ($m) • Gross debt has increased in line with the continued build Closing net debt ($m) Face value of borrowings less cash Averag
Slide 31: Dividend for 1H25
Dividend for 1H25 Uplift of 2 cents per share on 1H24, in line with 39 cents per share guidance for FY25 Ordinary dividends ($m) Interim dividend for 1H25 of 16 cents per share Declared 292 • Interim dividend of 16 cents per share is imputed to 88% or 14 cents per share for qualifying shareholders.
Slide 32: Normalised and expected FY26 EBITDAF
ASSUMPTIONS FOR NORMALISED EARNINGS Normalised and expected FY26 EBITDAF Assumes mean hydrology conditions CFDs C&I FY assumptions that deliver expected & normalised EBITDAF for FY26 810 280 547 $160/ 1 Channel choices maximise long term value¹ x 2 Net price² driven by best commercial practices = To
Slide 33: Questions
Questions 33
Slide 34: Supporting materials
Supporting materials 34
Slide 35: Preparing for Contact's combination with Manawa
Preparing for Contact’s combination with Manawa Targeting completion around the end of the first half of 2025 • On 11th September 2024, Contact entered into a Scheme Implementation Agreement (SIA) to acquire 100% of Manawa via a mixture of Contact shares and cash. • The proposed combination is expec
Slide 36: Guidance confirmation
Guidance confirmation Updated 1H25 result Change to prior guidance FY25 guidance Stay in Business Capex $120m - $130m $65m +$4 - 5m Stay in business accelerated programme (cash) ~$40m $25m - Stay in business capital expenditure (cash) BAU $77m - $87m $40m +$2m Ohaaki statutory outage brought forward
Slide 37: Normalised and expected EBITDAF assumptions
1H25 results Normalised and expected EBITDAF assumptions EBITDAF reconciliation to 1H25 ($m) With reconciliation to actual performance 1H25 assumptions that deliver expected & normalised EBITDAF of $770m over a financial year Normalised & Expected 385 Lower renewables 1 Channel choices maximise long
Slide 38: Generation and sales position
Operational data Generation and sales position Contact generation output sold to the national grid (GWh) Hydro generation (GWh) 4,533 4,411 4,603 Inflows stored include uncontrolled storage lakes 4,359 4,378 4,386 Thermal 360 3,905 508 2,053 836 825 870 817 generation 246 1,886 2,391 1,952 2,045 1,9
Slide 39: Plant and fuel performance
Plant and fuel performance Geothermal fuel performance Plant availability Geothermal fuel extracted at Wairakei vs consented (mT) Hydro Geothermal Net Availability Capacity Electricity Pool revenue Net Availability Capacity Electricity Pool revenue -17% capacity (%) factor output capacity (%) factor
Slide 40: Fuel storage movements
Operational data Fuel storage movements Hawea storage (GWh) Gas storage (PJ) Closing storage Closing storage (current) 7.8 4.7 191 0.5 2.4 259 264 5.0 5.8 116 253 141 2.4 166 0.8 175 2.7 264 1.7 189 3.4 324 242 354 2.8 3.4 1.6 230 324 7.8 0.9 Inflows 300 1.3 6.1 1.7 3.1 Gas Injected 5.8 5.0 4.7 259
Slide 41: Contracted and stored gas
Operational data Contracted and stored gas Contracted gas volumes (PJ) Gas storage monthly injections and extractions (PJ) Uses of gas (PJ) 15.5 15.2 15.3 14.6 Net extraction 1.1 (injection) 0.6 4.4 5.5 5.2 3.1 5.3 1.3 1.24 Purchases 9.4 9.3 9.6 9.8 9.1 0.96 8.8 5.6 6.6 6.3 6.4 0.51 5.9 0.35 0.34 0.
Slide 42: Contractual fuel position sufficient under mean hydro conditions
Fuel position Contractual fuel position sufficient to support expected sales position under mean hydro conditions Portfolio requirements for thermal generation CY25 (TWh) Gas supply and demand CY25 (PJ) Includes stored gas Hydro variation >> 8.0 Options in a dry year: • Access to stored water in Haw
Slide 43: Reconciliation between Profit and EBITDAF
Non-GAAP profit measure Reconciliation between Profit and EBITDAF EBITDAF is Contact’s earnings before interest, tax, depreciation and amortisation, and changes in fair value of financial The adjustments from EBITDAF to reported profit and instruments. movements on 1H24 are as follows: EBITDAF is co
Slide 44: Reconciliation of change in fair value of financial instruments
Reconciliation of change in fair value of financial instruments Realised / Change in fair value of financial instruments 1H25 1H24 Variance Description unrealised In the period, Contact entered into two long-term Realised gains or losses on the settlement of contracts for difference (CFD) that were
Slide 45: Historical financial information
Historic performance Historical financial information 1H231 1H24 1H25 Unit 1H21 1H22 Underlying Reported Underlying2 Reported Reported2 Revenue $m 1,141 1,141 994 1,306 1,707 Expenses3 $m 895 819 737 857 981 952 1,263 EBITDAF $m 246 322 257 137 334 362 404 Profit $m 78 134 79 (7) 134 153 142 Operati
Slide 46: Wholesale segment
Segmental performance Wholesale segment 1H25 1H24 Six months ended 31 December 2024 Six months ended 31 December 2023 Volume GWAP Volume GWAP Note: this table has not been rounded and might not add GWh $/MWh $m GWh $/MWh $m Electricity sales to Retail segment 1,991 153 304 1,989 141 280 Electricity
Slide 47: Retail segment
Historic performance Retail segment Residential electricity unit 1H22 1H23 1H24 1H25 Residential gas unit 1H22 1H23 1H24 1H25 Average connections # 367,199 381,222 386,540 400,518 Average connections # 63,182 66,796 67,658 70,322 Sales volumes GWh 1,408 1,445 1,478 1,506 Sales volumes TJ 970 881 916