How Meridian Weathered a $452M Loss and Accelerated Renewable Growth in FY25

A Challenging Year for Meridian Energy

Meridian Energy Limited has reported a tough financial year for the 12 months ending 30 June 2025, posting a net loss after tax of NZD 452 million, a sharp reversal from the NZD 429 million profit recorded in FY24. This downturn was primarily driven by a "perfect storm" of historically low hydro inflows, extended periods of low wind, two major droughts, and a dramatic decline in domestic gas availability, which collectively strained New Zealand's electricity supply system.

The company’s operating cash flows halved to NZD 318 million, while EBITDAF; a key industry performance measure; fell 32% to NZD 611 million. The energy margin, reflecting the net financial performance from electricity generation and retailing, decreased by 23% to NZD 982 million. These results were further impacted by NZD 300 million spent on hedge contracts and demand response agreements, including the largest-ever demand response call with New Zealand Aluminium Smelters (NZAS) to maintain security of supply.

Strategic Progress Amid Adversity

Despite the financial headwinds, Meridian made meaningful strides in its long-term strategy. The company advanced its renewable development pipeline, with the 176MW Harapaki Wind Farm and the 100MW Ruakākā Battery Energy Storage System (BESS) now fully operational. Five additional wind, solar, and battery projects have secured resource consents, including the Mount Munro Wind Farm and the Ruakākā Solar Farm, with early works underway on the latter.

Meridian also expanded its retail footprint through acquisitions of Flick Energy and NZ Windfarms, reinforcing its position as New Zealand’s largest electricity retailer with approximately 17% market share and over 405,000 customer connections. The company is transitioning its retail platform to Kraken, a modern digital system designed to enhance customer experience and operational efficiency.

Maintaining Financial Strength and Shareholder Returns

In light of the challenging year, Meridian’s Board declared a final ordinary dividend of 14.85 cents per share, maintaining the full-year dividend at 21 cents per share, consistent with the prior year. The dividend reinvestment plan continues with a 2% discount. The Board signaled that dividend levels may be reviewed prudently in the event of future severe droughts to manage cash flows while preserving the company’s BBB+ credit rating.

Operationally, Meridian restored 8.3MW of capacity and added 111.6MW of new generation capacity towards its FY28 target of 200MW restored and 300MW new capacity. Key infrastructure upgrades included the installation of a new transformer at Manapōuri, restoring 128MW, and leasing a transformer at West Wind, adding 45MW of capacity.

Navigating Energy Security and Market Challenges

Meridian played a pivotal role in stabilizing New Zealand’s electricity system amid gas shortages by underwriting agreements with Methanex and leveraging demand response with NZAS. The company is also part of a sector-wide agreement to support the operational resilience of the Huntly power station through a Strategic Energy Reserve, pending Commerce Commission approval.

Regulatory scrutiny intensified over the year, with the Electricity Authority proposing measures to increase competition in the electricity market. Meridian cautions that the core challenge lies in the structural decline of gas supply rather than market competition, emphasizing the need for accelerated investment in renewable generation to replace fossil fuel reliance.

Commitment to Sustainability and Culture

Meridian continues to lead in sustainability, ranking #1 in the electric utilities sector in the Dow Jones Best-in-Class Asia Pacific Index for the tenth consecutive year. The company revised its Scope 3 emissions target to an intensity-based measure, reflecting the need to balance emissions reductions with growth in renewable capacity. The company’s Energy Wellbeing Programme supported over 1,700 households facing energy hardship this year, with a goal to assist 5,000 by FY28.

Leadership changes included the appointment of Mike Roan as Chief Executive and Mandy Simpson as Chief Financial Officer. The company also completed a major retail business restructure and is embedding new ways of working to deliver smarter, data-driven customer experiences.

Looking Ahead

Meridian plans to invest NZD 2 billion over the next three years in renewable projects and infrastructure upgrades, including hydro storage enhancements and transformer replacements. The company is actively engaging with government and industry stakeholders to improve energy security and market frameworks, advocating for streamlined resource consenting and sustainable energy policies.

While FY25’s financial results reflect significant challenges, Meridian’s strategic progress, operational resilience, and strong balance sheet position it well to support New Zealand’s transition to a secure, affordable, and sustainable energy future.