Announcement
FLLYR: MCY: Mercury rises to challenge with strong FY2019 result
08:31am
MCY
20/08/2019 08:31
FLLYR
PRICE SENSITIVE
REL: 0831 HRS Mercury NZ Limited (NS)
FLLYR: MCY: Mercury rises to challenge with strong FY2019 result
Mercury rises to challenge with strong FY2019 result
Summary of FY2019 performance
>> Operating earnings (EBITDAF) $505 million, down 11%
o Influenced by lower hydro generation and only eight months of Metrix
earnings
>> Net profit after tax $357 million, up 53%
o Influenced by gain on sale of Metrix and lower interest costs
>> Final ordinary dividend 9.3 cents per share, fully imputed, to be paid on
30 September 2019
o Brings our total ordinary dividend to 15.5 cents per share, fully
imputed, up 2.6%
o 11th consecutive year of ordinary dividend growth
20 August 2019 - Mercury produced a strong result under unusual weather and
market conditions in its financial year to 30 June 2019, Chief Executive
Fraser Whineray said today.
Announcing Mercury's annual results, Mr Whineray said that the overall
performance of the business was even more pleasing than last year's record
earnings, as Mercury executed a number of key strategic moves to position the
company for long-term sustainable growth.
Financial year milestones included: the sale of Mercury's Metrix smart
metering business for $272 million; the announcement of a major refurbishment
programme for its Karapiro hydro station; consolidation of three Auckland
premises into one new Auckland office in Newmarket; the roll-out of a new
customer IT platform (SAP Commerce Cloud); and the announcement of the
construction of Mercury's first wind farm, at Turitea near Palmerston North.
Operating earnings (EBITDAF) of $505 million were down 11% (FY2018 $566
million), impacted by early wet weather across the Waikato catchment giving
way to an acutely dry period from September. Annual hydro generation of
4,006GWh was in line with the company's long-term average but was 941GWh down
on the record established last year.
Annual geothermal generation set a record, reaching 2,896GWh, coinciding with
record high annual spot prices caused in part by gas supply and thermal
generation constraints from October 2018.
"Making the most of the challenging hand dealt by Waikato catchment inflows
and elevated spot pricing required a very strong performance from generation
and wholesale markets teams in FY2019," Mr Whineray said.
"Our assets were prudently managed through challenging weather and wholesale
market conditions. High geothermal availability (97.7%), as the only
renewable energy source that is not weather dependent, maximised the
opportunity of historically high spot prices."
Mercury reduced retail acquisition activity and focused on customer value and
loyalty as retail margins contracted with elevated spot prices and ongoing
high levels of retail competition.
Mercury's record profit of $357 million was up $123 million on the prior
year's record, as the company benefited from lower interest costs as historic
hedges matured, and from the gain on sale of its Metrix smart metering
business. As with the prior year, there were no impairments recorded.
Financial Results
[See table in news release]
Dividend
Mercury Chair Joan Withers announced a final ordinary dividend of 9.3 cents
per share, fully imputed. This brings our total ordinary dividend to 15.5
cents per share, fully imputed, up 2.6% on FY2018. It is Mercury's 11th
consecutive year of ordinary dividend growth.
"Our underlying performance and the bold and carefully considered moves we
have executed successfully are all indicators that Mercury is well positioned
for growth in a dynamic market," Mrs Withers said.
Total shareholder returns (TSR) of 42.5% included significant share price
appreciation, which valued the company at $6.3 billion at financial year end,
compared with $4.6 billion at the same time last year.
FY2020 Guidance
EBITDAF guidance is $485 million for FY2020, based on forecast mean hydro and
geothermal generation (~ 6,620GWh). This guidance is subject to any material
events, significant one-off expenses or other unforeseeable circumstances
including hydrological conditions.
FY2020 ordinary dividend guidance has been issued at 15.8 cents per share, a
2% increase on FY2019.
Mercury will continue to provide updates of its mid-point estimate of
full-year hydro generation with its quarterly operating statistics.
Outlook
Mr Whineray said that Mercury anticipates solid long-term demand growth as
renewable electricity's advantages are increasingly unlocked through
technology advances in applications such as transport and industrial heat,
and as consumers demand cheaper, cleaner, locally generated and low-carbon
sources of energy to power their lives.
"We will continue to explore inspiring ways to encourage the transition to
electrified transport for the long-term benefit of the country as well as our
owners."
ABOUT MERCURY NZ LIMITED
Mercury's mission is energy freedom. Our purpose is to inspire New Zealanders
to enjoy energy in more wonderful ways and our goal is to be New Zealand's
leading energy brand. We focus on our customers, our people, our partners and
our country; maintain a long-term view of sustainability; and promote
wonderful choices. Mercury is energy made wonderful.
For further information: Media - 0272 105 337; Investors - 0275 173 470.
Visit us at: www.mercury.co.nz
End CA:00339377 For:MCY Type:FLLYR Time:2019-08-20 08:31:09
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