Vector Limited (NZX:VCT) posted a 55% jump in net profit to $240 million for FY2026, driven by a 20% rise in adjusted EBITDA and a record $544 million capital investment in Auckland’s electricity network.
- Net profit after tax up 55% to $240 million
- Adjusted EBITDA rises 20% to $482 million
- Record $544 million capital expenditure, $512 million in electricity network
- 13,017 new electricity connections added in Auckland
- New 10kW dynamic solar export limit introduced
Financial performance surges on regulatory reset
Vector Limited (NZX:VCT) delivered a robust set of financial results for the fiscal year ended 30 June 2026, with net profit after tax soaring 55% to $240 million. Adjusted EBITDA, which strips out capital contributions, rose 20% to $482 million, reflecting a full year benefit from the Commerce Commission’s electricity distribution price reset effective from 1 April 2025.
Revenue from continuing operations increased 8.3% to $1.195 billion, underpinned by a 12% jump in electricity distribution revenue to $905 million. This growth was partially offset by a decline in capital contributions, down 9% to $191 million, as Vector rebalanced its connection pricing and cost allocation amid Auckland’s evolving energy demands.
Record capital investment powers Auckland’s electrification
Vector ramped up capital expenditure to a record $544 million, a 16% increase on the prior year. The bulk of this spend, $512 million, was directed at Auckland’s electricity network, reflecting the city’s rapid growth and accelerating electrification trends. This included expanding network capacity, asset replacements, and digitalisation initiatives to enhance reliability and resilience.
Over 13,000 new electricity connections were added in FY2026, lifting the total connected customers to 642,134. The company also introduced a dynamic solar export limit of up to 10kW, allowing solar owners to maximise returns while managing network constraints.
Gas distribution faces transition headwinds
Vector’s gas distribution segment held steady with adjusted EBITDA flat at $47 million despite a 2% revenue increase. However, connections declined slightly to 119,991, and distributed gas volumes fell 1.7%, reflecting ongoing market shifts and the anticipated managed wind-down of gas usage in Auckland.
The Commerce Commission’s recent Default Price-Quality Path (DPP4) for gas networks retains accelerated depreciation and introduces a hybrid revenue adjustment mechanism to share demand risk, which Vector welcomed as a partial mitigation of transition risks.
ESG and climate commitments deepen
Vector’s FY2026 Climate Statement highlighted a 54% reduction in total greenhouse gas emissions since FY2020, driven by declines in fugitive gas emissions and operational efficiencies. The company set a new target to reduce absolute scope 1 and 2 emissions by 71.8% by FY2040, replacing its earlier 2030 net-zero commitment.
Physical climate risks like flooding, landslip, and fire remain a focus, with Vector investing $393 million in resilience projects over the next decade. Transition risks from accelerating electrification and gas decline are managed through digital platforms, demand-side orchestration, and regulatory engagement.
Governance and leadership refresh
Chris Blenkiron, appointed group chief executive in December 2025, has emphasized simplicity, execution, and performance. Under his leadership, Vector has deployed AI tools to improve asset management and customer experience, including partnerships with Google’s Tapestry group for advanced grid analytics.
The board remains dominated by Entrust, the energy consumer trust holding 75.1% of shares, with five independent directors and a strong focus on governance, risk management, and remuneration aligned with strategic priorities.
Dividend and outlook
Vector declared a final unimputed dividend of 13.5 cents per share, bringing full-year dividends to 26 cents. Looking ahead, the company guides FY2027 adjusted EBITDA between $540 million and $560 million, with gross capital expenditure expected to rise to between $605 million and $635 million, sustaining high investment in Auckland’s electricity network.
Vector’s challenge will be balancing continued infrastructure investment to support Auckland’s electrification with managing customer affordability and navigating the uncertain pace of gas transition. The dynamic solar export policy and increasing EV uptake will be key operational areas to watch as the network adapts to new demand patterns.
Bottom Line?
Vector’s record capital spend and strong earnings position it well for Auckland’s electrification, but the evolving gas transition and network flexibility demands pose ongoing challenges.
Questions in the middle?
- How will Vector manage rising network congestion risks as EV uptake and solar exports accelerate?
- What impact will the new dynamic solar export limits have on solar customer economics and network investment?
- How effectively can Vector mitigate gas distribution asset stranding amid declining volumes and regulatory uncertainty?