Mercury NZ Ltd
Morningstar Rating for Stocks | Fair Value | Economic Moat | Capital Allocation |
---|---|---|---|
A$3.77 | Dqxsfj | Hjvfxvm |
Mercury NZ Earnings: Dry Weather Caps Profit Growth Despite Higher Electricity Prices
Narrow-moat-rated Mercury NZ posted modest earnings growth in fiscal 2024. EBITDA rose 4% to NZD 877 million as lower hydroelectric generation volumes and higher operating costs largely offset higher customer prices. Guidance for fiscal 2025 EBITDA of NZD 820 million disappoints, a 6% fall on 2024 with dry weather hampering hydroelectric output and high gas supply costs. We downgrade our forecast by 10% to align with guidance. However, these factors should prove temporary as weather normalizes and the importance of gas-fired power stations diminishes as new renewables come online.