Mercury NZ Reports 33% Rise in Q4 Trading Margin Amid On-Schedule Renewable Project Advances

Mercury's Renewable Energy Portfolio and Multi-Utility Model

Mercury NZ Limited operates one of New Zealand's largest renewable energy portfolios, exclusively generating electricity from hydro, geothermal, and wind sources. The company functions both as a generator and a multi-utility retailer, offering electricity, gas, LPG, broadband, and mobile services. This diversified model enables Mercury to capture value across the energy supply chain, from generation to retail customer engagement, enhancing operational efficiency and providing multiple revenue streams that reduce reliance on any single segment or market condition.

Listed on the New Zealand and Australian Stock Exchanges under the ticker MCY, Mercury benefits from significant public accountability and investor visibility across the Tasman. The New Zealand Government's legislated minimum 51% ownership underscores the strategic importance of Mercury's renewable capacity to national energy security and climate objectives, ensuring alignment with broader energy policies while maintaining commercial discipline.

Q4 Trading Margin Soars 33% Year-on-Year Backed by Strong Generation

Mercury's Q4 trading margin of $390 million reflects a substantial increase from $293 million in the prior corresponding period, driven by effective execution of strategies optimizing generation and managing electricity sales, contracts, and derivatives. The company’s disciplined margin management translated higher renewable output into improved financial results. Year-to-date trading margin for the 12 months ending 30 June 2026 reached $1,421 million, up $269 million or 23% from $1,152 million in the previous year.

Generation in Q4 totaled 2,344GWh, 339GWh higher than the prior corresponding period, reflecting improved hydrological conditions and expanded renewable capacity. Year-to-date generation was 9,070GWh, compared to 7,907GWh last year, demonstrating consistent performance. Hydrological inflows during Q4 were at the 61st percentile, lower than the 79th percentile in the prior corresponding quarter, indicating strong generation despite less favorable water availability.

Kaiwera Downs Stage 2 Wind Farm Nears Completion After Turbine Installation

In Q4, Mercury completed turbine installation at the Kaiwera Downs Stage 2 Wind Farm, entering the reliability testing phase with expected handover by August 2026. This milestone expands Mercury's wind capacity and highlights the company’s ability to deliver large renewable projects on schedule. The project is a key part of Mercury’s strategy to increase renewable generation and support New Zealand’s energy transition.

The completion reflects Mercury’s WindPlatform infrastructure, which enables on-time, on-budget delivery of wind projects at scale, enhancing operational efficiency and reducing development risks. Successful execution of Kaiwera Downs Stage 2 strengthens investor confidence in Mercury’s renewable pipeline.

Kaiwaikawe Wind Farm Achieves First Generation, On Track for H1 FY27 Full Operation

The Kaiwaikawe Wind Farm began first generation from six turbines in July 2026, progressing on schedule for full operation in the first half of FY27. This milestone validates the project’s technical design and construction quality, adding to Mercury’s renewable portfolio.

The on-time first generation achievement underscores Mercury’s WindPlatform approach and competitive advantage in delivering wind projects within budget and schedule. Full operation will diversify Mercury’s generation mix and reduce reliance on any single source, supporting strategic growth objectives.

Fast-Track Consent Secured for Puke Kapo Hau Wind Farm, Enhancing Development Pipeline

Mercury obtained fast-track consent for the Puke Kapo Hau Wind Farm, advancing its renewable development pipeline. This expedited regulatory approval accelerates progress toward construction and commissioning, reflecting strong market and governmental support.

The fast-track consent validates Mercury’s development strategy and regulatory relationships, providing investors with visibility on future capacity additions. This approval aligns with New Zealand’s energy policies and supports Mercury’s long-term growth plans.

Geothermal Expansion: Over 1TWh Feasibility and $75 Million Drilling Investment

At its May Geothermal Investor Day, Mercury revealed that more than 1 terawatt-hour of geothermal potential has entered feasibility, with $75 million committed to appraisal drilling at Ngā Tamariki and Rotokawa fields. This investment highlights the importance of geothermal energy in Mercury’s renewable strategy.

Geothermal offers baseload generation complementing wind and hydro variability. During Q4, consolidated geothermal generation contributed 731GWh at a volume-weighted average price of $66.9 per MWh. The drilling commitment aims to de-risk projects and advance development, enhancing portfolio stability.

Hydro Refurbishment Program Advances Asset Renewal and Performance

Mercury’s hydro refurbishment program progressed during Q4, supporting asset renewal and long-term generation. Hydro generation contributed 1,103GWh at a volume-weighted average price of $80.7 per MWh, with year-to-date hydro output totaling 4,452GWh. Maintenance ensures reliable operation and capacity retention amid rising renewable demand.

Ongoing asset renewal reduces outage risks and performance declines, reflecting disciplined capital allocation and stewardship. Combining new wind and geothermal projects with hydro refurbishment creates a balanced portfolio management approach and supports long-term value.

Launch of Flex Rates Time of Use Plan Enhances Retail Customer Options

During the quarter, Mercury introduced Flex Rates, a Time of Use electricity plan for eligible retail customers, offering differentiated pricing based on consumption timing. This innovation empowers customers to better manage electricity costs and supports grid flexibility by incentivizing demand shifts to lower-price periods.

The retail segment generated 1,090GWh at a volume-weighted average price of $186.3 per MWh in Q4. Flex Rates align with sector trends toward consumer engagement and grid participation, potentially improving customer retention and margin management through demand-supply matching.

Hydrological Conditions Support Strong Year-to-Date Generation Despite Q4 Variability

Q4 hydrological inflows were at the 61st percentile, down from 79th percentile in the prior corresponding quarter, indicating less favorable water availability. Nonetheless, Mercury sustained strong generation through portfolio management and resource optimization. Year-to-date inflows reached the 83rd percentile, a significant improvement from the 12th percentile last year, underpinning strong annual generation and trading margin results.

Hydrological variability remains a key risk for hydro-reliant generators, causing earnings volatility. Mercury’s diversified portfolio across hydro, geothermal, and wind mitigates this risk. Investors should monitor hydrological forecasts and water storage as indicators of near-term performance and earnings sustainability.

Strategic Execution Drives Operational Momentum Across Development and Renewal

Mercury’s Q4 results demonstrate consistent strategic execution across renewable development and asset renewal programs. Key milestones at Kaiwera Downs Stage 2, Kaiwaikawe, and hydro refurbishment, alongside geothermal advances, highlight strong management capability and operational discipline.

The company’s priorities include expanding renewable capacity through wind and geothermal projects, optimizing hydro assets, and enhancing retail offerings. Progress across these initiatives, coupled with improved financial results, reflects balanced execution and effective capital allocation. Continued momentum positions Mercury well for upcoming project handovers and new capacity commissioning in FY27 and beyond.