In New Zealand, households account for one-third of total electricity demand while the industrial sector captures more than one third. Around a quarter of total electricity is being consumed by the commercial sector with the remaining demand coming from sectors such as transport and agriculture.
Let us now skim through four electricity generation companies listed on NZX, covering their recent updates and performance amidst the coronavirus pandemic.
Contact Energy Limited (NZX:CEN)
Contact Energy Limited (NZX: CEN) is an integrated and diversified energy company, which is focused on the generation and sale of electricity and gas in New Zealand. CEN has a S&P’s long-term credit rating of BBB/stable and short-term rating of A-2.
Operational Performance for March 2020:
The Company recently notified the market about its operational performance for the month of March 2020.
- During March 2020, the customer business recorded mass market electricity and gas sales of 310 GWh along with mass-market electricity and gas netback of $92.71/MWh, up from 287 GWh and $88.06/MWh in the same period a year ago.
- While the wholesale business reported contracted wholesale electricity sales of 577 GWh, including that sold to the customer business, down from 814 GWh in the year-ago period.
CEN – An Essential Business:
Contact Energy Limited has been classified as an essential business by the Government of New Zealand under the new COVID-19 rules. As New Zealand is at Level 4 of COVID-19, the Company would continue to deliver its services, ensuring support to the Government in a way limiting or eliminating the risk of spreading the virus.
At the close of the trading session on 17 April 2020, the stock of Contact Energy settled at NZ$6.530, moving upward by 5.49%.
Mercury NZ Limited (NZX:MCY)
Mercury NZ Limited is engaged in the generation and sales of electricity through retail brands such as Bosco and GLOBUG. The Company generates electricity through renewable sources such as hydro and geothermal. Mercury is also engaged in solar energy generation through Mercury Solar.
Suspension of Non-Essential Activity:
MCY recently halted its construction work throughout its sites as per the NZ government’s directive to stop all non-essential activity due to COVID-19. This suspension includes halting the activity at Mercury’s Turitea wind farm in Manawatu for a period. The Company is well prepared to assist the country’s response to COVID-19 pandemic, with a focus on its employees, customers as well as on business continuity.
Marginal Rise in Free Cash Flow:
During 1H FY20, the Company reported electricity generation of 3,428GWh, reflecting a decline of 377GWh because of drier conditions in Waikato and vital planned maintenance on numerous geothermal stations as part of its long-term asset management plan. Free cash flow for the period stood at $127 million, reflecting a marginal rise from $126 million in 1H FY19 as a result of lower interest costs, tax paid and elevated working capital requirements during pcp.
On the outlook front, Mercury revised its EBITDAF guidance for FY20 to $500 million, down from $510 million, which indicates an anticipated decline of 170 GWh in full-year generation to 3,900 GWh because of dry weather conditions in the Taupo catchment in 2H FY20 (as on 25 February 2020).
At the close of the trading session on 17 April 2020, the stock of Mercury NZ settled at NZ$4.400, reflecting an increase of 2.33%.
Genesis Energy Limited (NZX:GNE)
Genesis Energy Limited is a diversified energy company engaged in selling electricity, LPG, and reticulated natural gas via its retail brands, Energy Online and Genesis Energy.
Recently, the Company had notified the market that the issue price for shares issued in place of cash for the Interim Dividend in 2020 under the Company’s Dividend Reinvestment Plan was NZ$2.3118/share.
Strong Performance by the Retail Segment in 1H FY20:
The Company recently updated the market with the operational and financial performance for 1H FY20 and outlined the following:
- During the period, Genesis’ retail segment delivered a decent performance, which was negated by tough wholesale market conditions because of gas shortages and lower hydro generation.
- The retail segment of GNE continued to improve the value of the Company’s portfolio. Dual-fuel customers witnessed a rise of 5% and electricity sales volume (total) went up by 2.8% in Q2 FY20.
- GNE’s reported EBITDAF stood at $167 million, reflecting a fall of $30 million as compared to the prior corresponding period. Net Profit of GNE witnessed a decline of $40 million to $9 million during the period. The underlying earnings for the period stood at $16 million, down by $26 million.
For FY20, Genesis anticipates an improved performance with full Kupe Production and improved trading opportunities resulting from planned outages elsewhere in the sector.
At the close of the trading session on 17 April 2020, the stock of Genesis Energy settled at NZ$2.950, reflecting a rise of 3.15%.
Meridian Energy Limited (NZX:MEL)
Meridian Energy Limited is engaged in the generation and distribution of electricity in New Zealand and Australia. The Company generates electricity from renewable sources such as wind, sun and water. MEL is also involved in energy software and dam management.
Operating Performance for March 2020:
The Company stated that national hydro storage has decreased from 111% to 94% of the historical average in the month of March 2020 (to 9 April 2020). For March 2020, the Company’s total inflows stood at 79% of historical average. The Company reported a rise of 14.7% in New Zealand retail sales volumes. The Company is expecting significantly lower business and commercial sales, higher residential sales in April 2020.
As per MEL, there was a decline of 2% in national electricity demand in March 2020, which is lower as compared to March 2019. Moreover, there was a decrease in weekly demand in April 2020 by around 16% against April 2019 due to COVID-19 lockdown.
At the close of the trading session on 17 April 2020, the stock of Meridian Energy settled at NZ$4.370, reflecting a rise of 0.46%.