Mercury NZ (NZX:MCY): Is it 100% renewable energy company?

Highlights

  • Mercury NZ produces electricity using 100% renewable sources.
  • MCY stayed resilient in FY21 amid a challenging environment.
  • The Group continues to make a renewable investment to support NZ in its goal of achieving net-zero carbon emissions by 2050.

Mercury NZ Limited (NZX:MCYis the generator and retailer of electricity. It is focused on fulfilling energy requirements of NZ homes and businesses. Mercury plans to make NZ more efficient and viable by using domestic renewable energy.

Mercury’s details

Image source: © 2021 Kalkine Media, Data source- Refinitiv

The Group produces electricity from 100% renewable sources - hydro, wind and geothermal.

FY21 Performance

Mercury stayed resilient in FY21 amid a challenging production environment and increased spot prices.

The Group reported an NPAT of $141 million and EBITDAF of $463 million for the year ended 30 June 2021, down from $209 million and $490 million, respectively, in the previous year.

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However, Mercury stayed well placed from capital and liquidity perspectives. MCY Board declared a full-year dividend of 10.2cps, taking the full-year dividend to 17cps.

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The Group took bold steps to bring a change and shape its future. In June 2020, MCY entered into a deal to buy Trustpower’s retail business to fast-track its capability to provide the right product mix and value for clients.

 

Renewable investment

A large amount of investment in renewable energy is needed to replace fossil fuel generation amid climate change threats. Mercury has pledged to invest in renewable production to support decarbonisation and diversify its production sources to reduce the impact of dry years.

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The Group acquired Tilt Renewables’ 5 running wind farms in NZ and their future development choices in August. The acquisition would enable MCY to increase its total annual production by more than 1100GWh and add to its own line of future wind development options in NZ.

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Moreover, the construction of the Turitea wind farm is ongoing with grid connection, transmission line and northern windfarm substation fully commissioned. The project time remains dependent on the contractor’s performance.

On 7 December, at the time of writing, MCY was trading at $5.875, down 0.42%.

Bottom Line

Mercury is well positioned to play its role in achieving net-zero carbon emissions by 2050. The Group has set its earnings guidance at $590 million in FY22 and a dividend guidance of 20cps.

(NOTE: Currency is reported in NZ Dollar unless stated otherwise)

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