MCY Mercury NZ ( MRP Mighty River Power)

[bull....]

Saw the heading FY2021 EBITDAF guidance revised to $460 million ....

...first reaction great an upgrade

....but then noticed that they would have included the the word 'increased' or 'upgrade' in the heading

.....so opened up the announcement

....and its a profit downgrade - Mercury announced today that it has revised its FY2021 EBITDAF guidance from $520 million to $460 million.


...that's quite a big downgrade

...won't affect dividend will it?

huge downgrade for a power company , wonder if the other power companies are doing bad as well

[RTM]

Saw the heading FY2021 EBITDAF guidance revised to $460 million ....

...first reaction great an upgrade

....but then noticed that they would have included the the word 'increased' or 'upgrade' in the heading

.....so opened up the announcement

....and its a profit downgrade - Mercury announced today that it has revised its FY2021 EBITDAF guidance from $520 million to $460 million.


...that's quite a big downgrade

...won't affect dividend will it?

Maybe not significantly.

OUR DIVIDEND POLICY.
Mercury’s dividend policy is to make distributions with a pay-out ratio of 70% to 85% of Free Cash Flow on average over time subject to the board’s due consideration of the Company’s working capital requirements and medium-term asset investment programme; a sustainable financial structure for the company, recognising the Company’s targeted long-term credit rating of BBB+ assigned by S&P (or equivalent from another recognised credit rating agency); and the risks from predicted short and medium-term economic, market and hydrological conditions, and estimated financial performance.

The Board will seek to maintain consistency on a dividend per share basis from year to year while maintaining the dividend pay-out ratio on average over time.

Free Cash Flow is Net Cash Flow from Operating Activities less normalised stay-in-business capital expenditure.

Dividend payments are expected to be split into an interim dividend paid in April, targeting 40% of the total expected dividend for the financial year, and a final dividend paid in September.

It is the intention of the Board to attach imputation credits to dividends to the extent they are available. Details of past dividends and declared dividends announced can be found below under Historical Dividends.

[Jantar]

huge downgrade for a power company , wonder if the other power companies are doing bad as well

Because their downgrade is due to lack of generation, that means the other companies must be generating more to compensate. MCY have less generation from Taupo, and they don't own any thermal firming generation. The failure of Kawerau just makes matters worse.

The deficit will be made up by GNE and CEN who will both experience higher generation at higher prices. MEL and TPW will benefit from higher prices, While NWF will be kicking themselves for being 100% hedged.

[trader_jackson]

huge downgrade for MCY indeed... yet despite announcing a shock over 10% drop in guidance, the share price (despite being the most expensive in the sector with the highest Price to EBITDAF in the sector I believe) isn't even down 4%... bizarre

[mfd]

huge downgrade for MCY indeed... yet despite announcing a shock over 10% drop in guidance, the share price (despite being the most expensive in the sector with the highest Price to EBITDAF in the sector I believe) isn't even down 4%... bizarre

4% down seems a lot to me, for an issue likely affecting one year only, and related to weather and a power plant being down. 10% drop in guidance for one year, valuing over the next few decades, isn't a particularly big deal.

That said, it's not down enough for me to buy more yet...

[bull....]

Because their downgrade is due to lack of generation, that means the other companies must be generating more to compensate. MCY have less generation from Taupo, and they don't own any thermal firming generation. The failure of Kawerau just makes matters worse.

The deficit will be made up by GNE and CEN who will both experience higher generation at higher prices. MEL and TPW will benefit from higher prices, While NWF will be kicking themselves for being 100% hedged.

thx jantar for the update

[Sideshow Bob]

Mercury agrees to acquire Trustpower's retail business - NZX, New Zealand’s Exchange

Mercury agrees to acquire Trustpower's retail business

21/6/2021, 8:30 amGENERALMercury NZ Limited (Mercury) has announced that it has entered into binding agreements with Trustpower Limited (Trustpower, NZX:TPW) to acquire Trustpower’s retail business for NZ$441 million, payable in cash. The transaction is conditional on several matters, including Commerce Commission clearance, completion of the proposed restructure of Tauranga Energy Consumer Trust (TECT) and Trustpower shareholder approval.
Trustpower’s retail business is a leading multi-product utilities retailer selling electricity, gas, fixed and wireless broadband and mobile phone services to approximately 231,000 customers nationwide.
The combined business will have approximately 780,000 connections across both energy and telco services.
Mercury Chief Executive Vince Hawksworth said the acquisition would accelerate Mercury’s retail strategy, which is centred on delivering the right product mix and value for customers.
“Mercury and Trustpower are two highly complementary organisations, and this agreement would see the best of both being brought together for our customers,” said Mr Hawksworth.

“We know customers value the convenience and ease of bundled services in their home and Trustpower has deep expertise in bundling products in a way that people clearly appreciate. We see this adding material value to our customers and Mercury.”
“Bringing together the retail businesses of Mercury and Trustpower will also give us the scale to make meaningful investment in the underlying IT systems, driving greater innovation for our customers.”
Mr Hawksworth said the strength of Trustpower’s retail offering was underpinned by a highly skilled and motivated team, with approximately 500 staff focused on retail, based in Tauranga and Oamaru.
“We see a huge amount of talent and capability across both organisations, each with a strong focus on delivering the best possible outcomes for customers. We’re excited for how we can continue to build on this together,” said Mr Hawksworth.
“Customers will continue to enjoy all the great services and support they have today with Trustpower and with Mercury. And we’re looking forward to unlocking even more benefits and products for them over time.”
Mr Hawksworth noted that deeper integration of the two businesses is not planned until the underlying IT systems will enable improved customer experience.

Mercury has secured a commitment for a new bank facility sufficient to finance the acquisition.
Mercury notes:
The transaction is conditional on Mercury obtaining Commerce Commission clearance for the purchase of Trustpower’s retail business. Mercury will be working with the Commerce Commission to progress the application as efficiently as possible once filed.
In addition to requiring Trustpower shareholder approval, the transaction is also conditional on the proposed TECT restructure being completed. Independent of this transaction, the TECT trustees already have this restructure process underway, as they wish to ensure that all Trustpower’s local retail customers (as at 28 January 2021) will remain beneficiaries of the Trust following any sale of Trustpower’s retail business. Mercury’s offer is conditional on the restructure occurring to ensure that those Trustpower retail customers could continue as beneficiaries of the Trust. Further details of the TECT restructure can be found on TECT’s website.
The timing for regulatory approvals depends on several factors, including the current workload of the regulator. Mercury anticipates that these conditions will be fulfilled and completion of the transaction will occur within CY2021.
Further detail is provided in the accompanying presentation.
ENDS

[peat]

so ,,, MCY are not buying the power generating capabilities of TPW but they're buying the customers

and yet they havent been able to generate enough recently

???

[mfd]

so ,,, MCY are not buying the power generating capabilities of TPW but they're buying the customers

and yet they havent been able to generate enough recently

???

If you have a look at the trustpower presentation, they have contacted 100% of their generation to Mercury for a few years, tapering off after that. Hopefully that buys enough time to stick up a few wind farms using Tilt's pipeline.

[peat]

If you have a look at the trustpower presentation, they have contacted 100% of their generation to Mercury for a few years, tapering off after that. Hopefully that buys enough time to stick up a few wind farms using Tilt's pipeline.

cool thx... or it rains a bit more...

certainly no shortage of rain this weekend in Taranaki. I drove all around the region - circumnavigating the mountain but didnt get to see it once.