Highlights

  • Mercury NZ reported FY26 EBITDAF of $1.068 billion, up 36% from FY25, while NPAT increased to $321 million from $320 million.
  • The company reinvested $710 million, equivalent to 66% of FY26 EBITDAF, into new and existing renewable generation assets.
  • The FY26 ordinary Dividend rose to 27.0 cents per share, marking the 18th consecutive year of ordinary dividend growth.
  • FY27 EBITDAF guidance is $1.075 billion, with an ordinary dividend forecast at 29.0 cents per share.

Mercury NZ (ASX:MCY) reported higher operating Earnings for the full year ended 30 June 2026, with EBITDAF reaching $1.068 billion, an increase of 36% compared with FY25. The increase was attributed to higher hydro generation, new renewable generation and lower operating costs resulting from productivity initiatives.

Net profit after tax was $321 million, compared with $320 million in FY25. While NPAT increased, the improvement was considerably smaller than the rise in EBITDAF because of non-cash movements in the Fair Value of electricity derivatives.

Operating cash flow was $762 million during FY26. This provided funding for the company's Investment programme while also supporting Shareholder distributions.

Renewable Investment Expands

Mercury invested $710 million, representing 66% of FY26 EBITDAF, in new and existing renewable generation assets. Generation commenced during 2026 at three major projects: the Ngā Tamariki Geothermal Station expansion near Taupō, Kaiwera Downs 2 Wind Farm near Gore, and Kaiwaikawe Wind Farm near Dargaville.

The three projects represent approximately $1 billion of investment and are expected to add 1.1TWh of annual renewable generation. Mercury said this additional generation is equivalent to the electricity requirements of around 160,000 homes. All three projects are expected to be fully operational by the end of 2026.

The next major development is the Puke Kapo Hau, or Mahinerangi Stage 2, Wind Farm west of Dunedin. Mercury's Board approved the $506 million project in August, with final grid connection studies being completed with Transpower.

New Demand and Datagrid Investment

Mahinerangi Wind Farm, incorporating Stages 1 and 2, is expected to have total capacity of 228MW and annual generation of 646GWh once completed, making it New Zealand's largest wind farm according to Mercury.

The project is also positioned to support electricity demand in the South Island, including demand associated with Datagrid's planned large-scale data centre development. Mercury announced a 140MW power purchase option agreement with Datagrid in March 2026 and invested NZ$53 million for a 12.7% minority stake in Datagrid NZ in July.

The company also introduced Flex Rates in June, a time-of-use electricity plan designed to give eligible customers greater flexibility over their energy costs.

Dividends and FY27 Guidance

Mercury declared a fully imputed final dividend of 17.0 cents per share, taking the FY26 ordinary dividend to 27.0 cents per share. This represented an increase of 3 cents per share from FY25 and extended the company's record of annual ordinary dividend growth to 18 consecutive years. The Dividend reinvestment Plan remains available to shareholders.

For FY27, Mercury provided EBITDAF guidance of $1.075 billion, compared with $1.068 billion achieved in FY26. The company also indicated an ordinary dividend of 29.0 cents per share for the year. The EBITDAF guidance incorporates expectations for new generation, continued cost discipline and 4.1TWh of hydro generation, while remaining subject to hydrological conditions, significant one-off expenses, material events and other unforeseen circumstances.

Balance Sheet Position

Mercury reported an S&P-adjusted debt-to-EBITDA ratio of 2.0 times and said it had sufficient headroom to fund its current growth programme within its target financial parameters. The company's FY26 investment and development activity therefore occurred alongside continued funding capacity for its renewable generation pipeline and shareholder distributions.

Conclusion

Mercury NZ's FY26 results showed higher EBITDAF, a marginal increase in NPAT, increased renewable generation and continued Capital deployment across its development portfolio. The company also increased its ordinary dividend to 27.0 cents per share and provided FY27 EBITDAF guidance of $1.075 billion alongside a 29.0 cents per share dividend indication. Its current programme includes projects expected to add renewable generation, while the company's investment in Datagrid and power purchase arrangement connect its generation development with emerging electricity demand.