Mercury raises earnings outlook again as Taupo rain boosts generation

Mercury chief executive Fraser Whineray. Photo / File

Mercury NZ has raised its earnings guidance for a fourth time as more rain around Taupo keeps the power company's North Island generation pumping out more electricity.

The Auckland-based electricity generator-retailer expects earnings before interest, tax, depreciation, amortisation, and fair value adjustments of $555 million in the year ending June 30, up from a previous forecast of $540m which had already been upgraded three times on the inclement weather. Mercury reported ebitdaf of $523m in 2017.

"This is due to an expected 200 GWh (gigawatt hours) increase in full-year forecast hydro generation due to continued wet weather in the Taupo area," the company said in a statement.

"Annual hydro generation is now forecast to be 4,900 GWh for the financial year, or 900 GWh above average."

Mercury and Trustpower have enjoyed improved earnings outlooks for the 2018 financial year with rain patterns benefiting their North Island generation, while their rivals with large South Island hydro catchments contended with lower lake levels than normal.

Things have improved for the South Island hydro lakes since the dry spring with dams back at more normal levels.

Separately, Meridian Energy, the country's biggest electricity generator, said its South Island hydro storage was at 117 per cent of average and its North Island storage was at 138 per cent as at Jun 13. National hydro storage was 120 per cent of the historical average, it said.

Meridian's May monthly inflow was 105 per cent of the average in a mixed month where dry conditions were followed by unsettled weather later in the month.

The company's hydro generation climbed 18 per cent to 1,037 GWh in May from a year earlier, offsetting earlier declines which have seen year-to-date total generation 11,301 GWh, down 8.9 per cent from a year earlier.

Mercury shares last traded at $3.38 and have increased 0.3 per cent so far this year having recently completed a $50m share buyback. Meridian stock last traded at $3.165 and has gained 9.1 per cent so far this year.