Announcement

FLLYR: MCY: Mercury rises to challenge with strong FY2019 result 08:31a.m. 
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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