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Mercury Energy's earnings have fallen on the back of weaker renewable electricity generation, with its bottom-line profit slumping as it took a paper hit from risky financial contracts and hedges.
Key numbers for the 12 months ended June compared with a year ago:
- Net profit after tax $1m vs $290m
- Revenue $3.5b vs $3.42b
- Operating earnings (EBITDAF) $786m vs $877m
- Generation 7906 Gwh vs 8780 Gwh
- Final dividend 14.4 cents per share vs 14 cps
Mercury said it was a "challenging year", with inflation pressures compounding issues such as weak hydro generation and gas constraints, which pushed up spot prices during periods of peak demand.
Generation fell 10 percent, largely due to reduced hydro generation amid dry weather, with the Waikato scheme recording its fourth-lowest year of generation since 1980, helping drive down underlying profit.
The company's bottom line fell sharply to $1 million on the back of its lower operating earnings, and as it took a $340m hit from movements in the value of financial contracts, compared to $14m a year ago.
Mercury chair Scott St John said he was optimistic about the long-term outlook due to the "sheer volume" of new generation projects underway.
"The way we produce and use energy is changing, prompting valid questions about what the system requires to keep delivering secure, affordable electricity into the future," he said.
"Improvements to market and policy settings are also required, including greater transparency of gas market information to support decision making."
Mercury chief executive Stew Hamilton said the company was "acutely aware" of pressures faced by households and businesses, with price increases of nearly 10 percent largely driven by lines charges.
"While the retail energy component of residential electricity prices has remained relatively stable in real terms over the past decade, we know the overall increase will be disproportionately felt by some customers, so we have implemented a range of measures to help those in hardship," Hamilton said.
Mercury said total connections improved 5 percent to 906,000 in the year.
The company forecast operating earnings of $1 billion in 2026.
