Is Meridian Energy(NZX:MEL) on a growth path post FY21?

Highlights

  • Meridian Energy went through tough times due to drought and COVID-19 disruptions
  • Annual results were reflective of these conditions
  • Substantial Dividend declared by the Company with DRP plan

Energy companies also witnessed lower demand due displacements and industrial bottlenecks due to COVID-19 in the last two years, but now it seems to be on the path of recovery. Meridian Energy Limited (NZX:MEL) (ASX:MEZ), in particular, a dual-listed electricity producing Company in the country, which uses various renewables resources as raw material, which works incessantly to achieve its sustainability goals, had its own journey owing to challenges like the drought and COVID-19.

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Annual results

In its annual results released on 25 August 2021, the Company recorded underlying NPAT of NZ$232 million which is 27% lower than pcp, while the NPAT for period till 30 June 2021 was NZ$428 million. It was further said that the EBITDA was NZ$729 million or 15% lower than pcp. The previous two years had witnessed strong retail sales volumes, while this year the trend seemed to continue with volumes having grown by 14% from pcp.

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Drought Conditions in the country

The conditions of drought, that were prevalent for a greater part of the second half of the year,  and the generation of hydro power as a result of the same saw a 12% decline on the pcp. Neal Barclay the Chef Executive of the Company was of the view that the cash earnings in the second half of the year were dampened by the drought conditions, while the hedge costs saw an increase.

Dividend declaration and reinvestment plans

It was noteworthy to see that the dividend remained stable in the process, with a final dividend of 11.20 cents per share, which took the total dividend of FY21 to 16.90 cents per share. With the introduction of the Dividend Reinvestment plan this year, the Company  shall give the option to the shareholders to further invest their earnings and stand the chance of making further gains in the future. Under its DRP scheme, the Company shall offer a 2% discount to the dividend.

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In a separate recent announcement, the Company welcomed on-board Tania Simpson as a Non-Executive Director for the board.

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Bottom Line

Considering the course of action, the country has taken over the past year, it seems like they are in the correct direction in terms of recovery, while aiming at sustainable function.

On 14 September 2021, the Company traded at NZ$5.180, down by 0.19% at the time of writing.

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