Mercury NZ lifted its net profit by 159% in the June year to $290 million, mostly due to changes in the fair value of its unhedged financial instruments. 

The company’s earnings before interest, tax, depreciation, amoritisation and financial instruments (Ebitdaf) came to $877m, up 4% on the previous year and slightly below the company’s previously advised guidance of $880m. 

“The impact of significant investment to increase scale, together with strong generation performance, helped secure Mercury’s results over the period,” chief executive Vince Hawksworth said. 

Over the year, Mercury continued to deliver more renewable generation and committed $700m to the expansion of the Kaiwera Downs wind farm and the Ngā Tamariki geothermal station. 

“These will help support Aotearoa’s shift to an electrified future,” he said. 

Hawksworth will retire at the end of this month. Mercury’s executive general manager of generation, Stew Hamilton, will succeed him. 

Mercury chairman Scott St John said the energy transition would require “careful navigation” - particularly to maintain reliable power while rapidly and affordably scaling up renewables. 

St John said the company expected electricity price pressure to continue for some time, reflecting the ongoing need for higher-cost thermal generation in the system. 

“As we continue to invest in renewables, generating capacity must remain flexible enough to quickly adjust to changing environmental conditions, such as low rainfall or cloudy, still days. 

Mercury chief executive Vince Hawksworth. 

“Gas has a critical role as a transition fuel,” he said. 

“Gas supply challenges need to be addressed head-on, with recent projections highlighting this may continue to impact energy markets through to early 2026.” 

To help facilitate the transition, Mercury said it had supported the ongoing operation of the Huntly Power Station with purchases through the market security and Huntly firming options. 

St John said lower-than-usual hydro inflow from February 1 to August 18 had compounded current challenges, contributing to high spot and wholesale prices. 

“While a few are exposed to these current high spot prices, 98% of our sales volume across residential, small and large business customers are protected from these elevated prices due to fixed-rate agreements,” he said. 

Mercury’s Ebitdaf guidance for 2025 was set at $820m. 

The company, just over half-owned by the Government, will pay a fully imputed final dividend of 14.0 cents per share, bringing the full-year ordinary dividend to 23.3 cps, up 7% on the prior year’s. 

For the current year, Mercury expects to pay a dividend of 24.0 cps. 

Mercury generates electricity from 100% renewable sources - hydro, geothermal and wind. 

It also retails electricity, gas, broadband and mobile services. 

By late morning, Mercury’s share price was down 31.5c or 4.6 per cent at $6.48. 

Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.