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Meridian Energy Ltd

Meridian Energy Ltd (MEL.NZ) Q1 2026 Earnings Call Transcript

Bullish Renewable Utilities 8.59B New Zealand

Meridian Energy Limited engages in the generation and retailing of electricity to residential, business, and industrial customers in New Zealand, Australia, and the United Kingdom. The company generates electricity through 7 hydro stations; 8 wind farms; and 100MW battery energy storage system, as well as grid-scale solar array. It sells electricity under the Meridian Energy and Powershop brands. It also offers solar installation, software development, professional, and insurance services. The company was formerly known as Hydro Energy Limited. Meridian Energy Limited was incorporated in 1998 and is based in Wellington, New Zealand. Meridian Energy Limited operates as a subsidiary of New Zealand.

Meridian delivered a solid H1 FY26 with strong cash flow and EBITDAF, advancing a large renewable buildout while navigating regulatory/consent delays and maintaining guidance.

⭐ Key Highlights

Interim results
Meridian reported strong H1 FY26 cash flow of $336m and EBITDAF of $506m, signaling a rebound from the prior year.
Significant investment pipeline
Plans to invest over $1.2bn across Mt. Munro, Te Rere Hau, and Te Rahui Solar Stage 2, with 1.3 TWh of new renewable generation to the NZ system.
Generation and asset program
Construction underway at Ruakaka (solar+battery) and Te Rahui, with Mt. Munro pending a final green light; Te Rere Hau consent delays noted but progress continues.
Contingent storage and regulatory factors
Continued push for contingent storage and large project referrals (Waiinu wind, Western Bay Solar Farm) to deliver near-term consumer benefits and lower wholesale prices.
Dividend policy and leverage
Interim dividend up 4% to $0.0640 per share; gross debt metrics improved to net debt/EBITDAF 1.9x; green debt issuance reinforcing balance sheet.
Market outlook and prices
Forward price expectations remain supportive with high investment pace expected to dampen long-term prices; LNG and transmission/regulatory costs are key risks.

✔Positive Signals

  • Interim cash flow of $336m and EBITDAF of $506m beat last year’s period
  • Significant growth in retail volumes and higher contracted sales contributing to margin uplift
  • Green debt issuance and net debt/EBITDAF improvement to 1.9x strengthen balance sheet
  • Large pipeline of projects (1.3 TWh in next 12 months) expanding renewable generation
  • Dividend increased 4% with ongoing dividend policy targeting growth

✖Negative Signals

  • Delays and permitting risk for Te Rere Hau and related airway approvals
  • Rising capital costs for wind and solar assets ( Mt. Munro, Te Rahui Stage 2 )
  • Regulatory and transmission line charge increases impacting electricity bills
  • Contingent storage process and regulatory approvals could delay near-term benefits
  • Operational and integration risk from Kraken platform and DigiGen initiative

📊Financial Results

  • H1 FY26 operating cash flow: $336m vs. prior-year period (improved by $286m)
  • EBITDAF: $506m, up materially versus last year’s first half
  • Net debt to EBITDAF: 1.9x (improved from 2.5x in June); total borrowings $1.9b; net debt $1.7b
  • Capex in H1: $86m with $53m growth Capex (Ruakaka, Kraken construction) and higher second-half spend anticipated
  • Underlying NPAT positive versus last year’s first half; gross fair value movements in hedges significantly influenced reported NPAT

🔮Future Guidance

  • Full-year guidance unchanged: EBITDAF guidance of NZD 311–316m; Capex guidance NZD 330–360m
  • Interim dividend imputed at 85%; potential for continued dividend growth under the policy to 80–100% of operating free cash flow
  • Waitaki power station upgrade final investment decision likely in H2 FY26; contingent storage initiatives targeting July regulatory milestones
  • Continued investment in Ruakaka, Manawatu, Te Rahui Stage 2, and other consented projects with potential additions if approvals advance

💡Interesting Insights

  • Meridian expects hydro and storage expansions to reduce dry-year risk from ~4 TWh today to ~2.5 TWh by 2035, underpinning a more secure and cheaper energy system

Detailed Analysis

AI-generated summary of Meridian Energy Ltd earnings call transcript.

Meridian posted a robust first half FY26, driven by higher contracted sales, stronger generation volumes, and favorable hydro conditions, while continuing to progress a large renewable investment pipeline (Mt. Munro, Te Rahui Stage 2, and Ruakaka), and advancing contingent storage initiatives. The company expects to deploy over 1,300 GWh of new or consented capacity in the next 12 months, lifting total capacity to more than 2,500 GWh in construction/consented assets and targeting a 30% market share. Although Te Rere Hau delays and regulatory line charges pose challenges, Meridian remains focused on delivering cheaper, cleaner electricity and improving consumer affordability. The interim dividend rose 4% and leverage improved to a net debt/EBITDAF of 1.9x, supported by a strengthened green debt profile. Guidance for FY26 remains broadly unchanged, with capex guidance of NZD 330–360m and an improving but still regulated cost environment.

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