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Mercury raises earnings forecast

NZ Newswire logoNZ Newswire 19/04/2017 Paul McBeth
Hydroelectric power station at Lake Maraetai in Mangakino © Getty ImagesChameleons Eye/REX/Shutterstock/Rex Images Hydroelectric power station at Lake Maraetai in Mangakino

Mercury Energy, the electricity generator-retailer formerly known as MightyRiverPower, increased annual earnings guidance 2 per cent as unseasonably strong inflows in the Waikato catchment lifted the power company's hydro generation.

Mercury expects earnings before interest, tax, depreciation, amortisation and fair value adjustments to be $510 million in the 12 months ending June 30, up from $493m a year earlier.

The $10m increase in guidance is Mercury's second upgrade, with the generator-retailer raising its annual forecast when posting its first-half result in February due to increased hydro generation.

"This is due to a forecast 250 GWh (gigawatt hours) increase in full year hydro generation to 4500 GWh resulting from unseasonably strong inflows to the Waikato catchment," the company said in a statement.

"Other FY2017 guidance remains unchanged."

Above-average rainfall through the latter half of last year helped bolster Mercury's first-half earnings, and the company on Thursday said those conditions continued in the March quarter.

Of the increased generation forecast, 170 GWh reflected inflows into the Waikato catchment.

Still, the company's quarterly operating report showed national demand for electricity remained subdued, down 0.2 per cent from the same period a year earlier as lower industrial use offset an increase in demand from dairy processors.

Mercury had 390,000 electricity customers at the end of March, up from 377,000 a year earlier, Its annualised churn rate of 17.6 per cent was the lowest among the major retailers and below the market average of 20.5 per cent, it said.

The shares last traded at $3.12 and have gained 5.4 per cent so far this year.

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