Meridian Energy (MEL) H1 2025 earnings summary

Executive summary

• Interim results for the six months to 31 December 2024 were significantly impacted by record low winter inflows, extreme weather, and rapid gas decline, resulting in a challenging operating environment and a net loss after tax of $121 million compared to a $191 million profit in the prior year.

• EBITDAF dropped 42% to $186 million, driven by lower hydro generation, higher supply and hedge costs, and negative fair value hedge movements.

• Retail transformation and digital enhancements led to a 4% increase in customer numbers and a 5% rise in retail revenue since June 2024.

• Leadership transition is underway, with the CFO set to become CEO from 30 June 2025.

• New contracts with NZ Aluminium Smelter (NZAS) led to major changes in income, expenses, and balance sheet classification.

Financial highlights

• Operating cash flows fell by $253 million to $50 million, and EBITDAF dropped to $186 million, a 42% year-over-year decline.

• Net profit after tax was -$121 million, with underlying NPAT at -$5 million, reflecting lower EBITDAF and higher depreciation.

• Operating revenue increased to $2,255 million, while operating expenses remained stable at $1,700 million.

• Interim dividend maintained at 6.15 cents per share, imputed at 85%, with a dividend reinvestment plan at a 2% discount.

• Net debt to EBITDAF increased to 2.2x, with total borrowings at $1,657 million and $719 million undrawn facilities.

Outlook and guidance

• Full-year operating cost guidance reduced to $298–$304 million, and FY25 capital expenditure guidance lowered to $220–$250 million due to project delays.

• Over $1 billion in new capital commitments expected in 2025, with 680MW of development projects now consented.

• Dividend policy remains focused on stability and long-term payout ratios, with flexibility to exceed 100% payout in exceptional years.

• Recovery in financial performance is contingent on improved hydrology and resolution of gas market issues.

• Additional hedge and demand response costs of $25 million or more expected in Q3 FY25.