Mercury NZ Limited posted a staggering 32,000% surge in net profit for FY26 despite an 8% revenue dip, underpinned by strong renewable generation and disciplined cost control.
- Net profit surges to NZD 321m, up 32,000%
- EBITDAF climbs 36% to NZD 1.068 billion
- Record $710 million invested in renewable assets
- Three major renewable projects commence generation
- FY27 EBITDAF guidance set at NZD 1.075 billion
Profit Soars Amid Revenue Decline
Mercury NZ Limited (NZX:MCY) stunned investors with a net profit after tax (NPAT) of NZD 321 million for the year ended 30 June 2026, a leap of 32,000% compared to the prior year. This came despite an 8% decline in total revenue to NZD 3.224 billion. The outsized profit jump was driven by a 36% increase in EBITDAF to NZD 1.068 billion, fuelled by higher renewable generation volumes, improved sales yields, and stringent cost management.
Operating expenses were held flat at NZD 370 million, $26 million lower than FY25, reflecting disciplined execution despite inflationary pressures. This cost control, combined with a strong integrated generation portfolio, underpinned the robust earnings growth.
Record Investment in Renewables
Mercury reinvested a record 66% of its EBITDAF, totaling NZD 710 million, into new and existing renewable generation assets. This capital expenditure included $560 million on growth projects and $150 million on stay-in-business (SIB) maintenance and refurbishment.
Three flagship projects advanced to generation in FY26: the Ngā Tamariki Geothermal Station expansion near Taupō, the Kaiwera Downs Stage 2 Wind Farm near Gore, and the Kaiwaikawe Wind Farm near Dargaville. Combined, these represent approximately NZD 1 billion in investment and add 1.1 terawatt-hours (TWh) of renewable electricity annually, enough to power around 160,000 homes.
Looking ahead, Mercury’s Board approved the NZD 506 million Puke Kapo Hau (Mahinerangi Stage 2) Wind Farm, expected to become New Zealand’s largest wind farm upon completion, with 228MW capacity and 646GWh annual generation. The project is strategically positioned to serve South Island demand, including Datagrid’s advanced AI data centre in Southland, where Mercury recently took a 12.7% equity stake and secured a 140MW power purchase option agreement. This move exemplifies Mercury’s strategy to link renewable supply with emerging large-scale digital infrastructure demand, supporting long-term growth and system resilience.
Customer Innovation and Support
In June 2026, Mercury launched Flex Rates, a flexible time-of-use plan offering residential and small-to-medium business customers greater control over their electricity costs. This initiative is part of a broader push to empower customers during the energy transition.
Mercury also continued to provide material support to customers facing hardship and extended assistance to social retailers Nau Mai Rā and Toast Electric, reflecting a commitment to community wellbeing amid cost-of-living pressures.
Financial Position and Dividend Growth
The company’s balance sheet remains robust, with net debt rising modestly to NZD 2.354 billion, reflecting ongoing capital investment, and a debt-to-EBITDA ratio of 2.0x, comfortably within the BBB+ credit rating guardrails. Undrawn committed borrowing facilities stood at NZD 610 million at year-end, providing ample headroom for growth.
Mercury declared a fully imputed final dividend of 17.0 cents per share, bringing the full-year dividend to 27.0 cents per share, marking the 18th consecutive year of dividend growth. FY27 dividend guidance is 29.0 cents per share, a 7% increase.
Strategic Outlook and Guidance
FY27 EBITDAF guidance is set at NZD 1.075 billion, reflecting contributions from new generation assets and continued operational discipline. The company plans to maintain stay-in-business capital expenditure at NZD 150 million and remains focused on delivering 3.5TWh of new renewable generation by 2030, leveraging its wind and geothermal platforms.
Mercury’s strategic framework emphasizes disciplined capital allocation, customer empowerment, and partnership building, notably with iwi and key stakeholders, to navigate the energy transition while maintaining affordability and reliability.
The company is actively engaged in policy discussions around energy market reform, security of supply, and environmental stewardship, supporting initiatives such as the Huntly Firming Option and advocating for timely consenting processes for renewable projects.
Climate Commitments and Governance
Mercury’s climate strategy is anchored in delivering reliable renewable energy, accelerating electrification, and reducing emissions intensity. The company updated its emissions reduction targets in FY26, aligning with the Science Based Targets initiative and incorporating lessons from geothermal non-condensable gas reinjection projects.
The Board and management maintain rigorous oversight of climate-related risks and opportunities, integrating them into enterprise risk management and linking executive remuneration to climate performance metrics.
Independent auditors Ernst & Young provided an unmodified opinion on the financial statements and limited assurance on greenhouse gas disclosures, affirming the integrity of Mercury’s reporting.
What to Watch Next
Investors will be keen to monitor the ramp-up of Kaiwaikawe Wind Farm to full operation by year-end, the execution and grid connection progress at Puke Kapo Hau, and the impact of El Niño weather patterns on hydro generation and spot prices. The ongoing review of dividend policy amid a maturing earnings base and capital investment cycle will also be a focal point, as will Mercury’s ability to secure long-term contracts with large industrial customers to underpin future growth.
Mercury’s strategic bets on digital infrastructure demand, notably through its Datagrid investment, signal a forward-looking approach to renewable energy development, but execution risks and regulatory uncertainties remain factors to watch as the energy transition unfolds.
Bottom Line?
Mercury’s record profit and aggressive renewable investment underscore its pivotal role in New Zealand’s energy transition, yet sustaining growth and dividends hinges on navigating evolving market, weather, and policy landscapes.
Questions in the middle?
- How will Mercury manage hydrological variability amid El Niño conditions impacting hydro generation?
- What are the risks and timelines associated with Puke Kapo Hau wind farm’s grid connection and construction?
- How might evolving regulatory reforms and energy market interventions affect Mercury’s long-term investment returns?