Table of Contents
What changed
Revenue was essentially flat at $4.8b (-0.4%), but the result below the top line deteriorated sharply. EBITDAF fell 32.5% to $611m, PBT swung from +$594m to -$619m, and NPAT moved from +$429m to -$452m. Management attributed the step-down primarily to a 23% fall in energy margin (from $1.3b), citing record-low hydro inflows, an unprecedented domestic gas shortage, and the cost of calling demand-response contracts including with the NZ Aluminium Smelter.
Operating cash flow halved to $318m from $667m. Capex also stepped down to $143m from $281m, leaving pre-lease free cash flow of roughly $175m against $386m prior. Cash on hand fell to $123m, gross borrowings rose to $1.6b, and net debt climbed to ~$1.4b, lifting net debt/EBITDAF to 2.4x from 1.2x. The final dividend was held flat at 14.85 cps.
What matters
- Earnings quality is a hydrology/fuel story, not a demand story. With revenue flat, the entire EBITDAF decline ($294m) sits in gross energy margin. This is consistent with a dry-year cost shock rather than structural pricing weakness, but it is also the kind of event that can recur and that the market had arguably under-priced given the FY24 margin high.
- Leverage has materially weakened. Net debt/EBITDAF roughly doubled to 2.4x, and the move was driven by both denominator (EBITDAF) and numerator (gross borrowings up $222m, cash down $98m). Equity rose to $8.9b but that reflects reserves movements, not retained earnings.
- Dividend was not covered by free cash flow. The flat 14.85 cps final implies a payout of roughly 219% of pre-lease FCF on the calculation pass, versus 99% prior. Holding the dividend through a loss year is a clear signal of confidence in normalisation, but it is being funded by the balance sheet.
Expectations
No quantified forward-work balance, earnings guidance, or capex target was disclosed in the supplied release. Against the HY25 shape, the first half contributed only 42.1% of full-year EBITDAF and 26.8% of full-year NPAT, so the profile was second-half weighted – the second half alone still delivered an implied ~$354m of EBITDAF and a ~$331m loss. That is recovering, not recovered: H2 EBITDAF annualises well below the FY24 base. The release supports the argument that conditions eased after the H1 stress event, but it does not underpin a return to the FY24 margin level.
Quality of result
A material portion of the FY25 result is clearly timing/event-driven. The 23% energy margin decline points to external hydrology and fuel conditions rather than a permanent impairment of earning power, and the capex step-down flatters FCF optically. Working against that read, cash conversion deteriorated sharply – OCF/EBITDAF fell to 52.0% from 73.7% – and FCF/NPAT flipped to negative. Trade receivables fell to $406m (30.6 days of revenue, from 40.3), so the cash shortfall is not being masked by a receivables build; if anything receivables release helped. The durable read is lower: EBITDAF is down materially, leverage is up, and the dividend is being carried on debt.
Unresolved
- No statutory-to-underlying reconciliation was provided for FY25, so the split between the energy-margin shock, hedge revaluations, and any other below-the-line items in the $1.2b PBT swing is not transparent from the excerpts.
- There is no disclosed view on forward hydrology positioning, hedge book, or the duration of the Tiwai demand-response call – all key to whether H2 momentum holds.
- No capex plan or growth-project commitment schedule is supplied, making it hard to judge whether the reduced $143m spend is a deferral or a new run-rate.
- No net debt target, gearing policy trigger, or dividend policy reaffirmation in the supplied text, despite leverage doubling.
This briefing cannot assess wholesale price trajectory, hydrology normalisation, or the value of Meridian's hedge book because none of those inputs are in the supplied extraction.
Key metrics
| Metric | FY25 | FY24 | Change |
|---|---|---|---|
| Revenue | $4.8b | $4.9b | -0.4% ↓ |
| Net profit after tax | −$452m | $429m | -205.4% ↓ |
| Net cash inflow from operating activities | $318m | $667m | -52.3% ↓ |
| Final dividend per share | 14.8c | 14.8c | flat |
| EBITDAF | $611m | $905m | -32.5% ↓ |
| Profit before tax | −$619m | $594m | -204.2% ↓ |
| Cash and cash equivalents | $123m | $221m | -44.3% ↓ |
| Total assets | $15.0m | $13.5m | +10.6% ↑ |
Reference: annolyse.ai/briefings/mel-fy25
Analytical metrics
| Metric | FY25 | FY24 | Context |
|---|---|---|---|
| Effective tax rate | n/m (loss period) | 27.8% | current loss period |
| OCF / EBITDAF (cash conversion) | 52.0% | 73.7% | deteriorated |
| FCF pre-lease | $175.0m | $386.0m | −$211.0m |
| FCF / NPAT | -38.7% | 90.1% | complementary conversion metric |
| Capex % revenue | 3.0% | 5.8% | — |
| Capex | −$143.0m | −$281.0m | +$138.0m |
| Debtor days | 30.6 | 40.3 | -9.6 days |
| Operating working capital | $406.0m | $536.0m | −$130.0m absorbed |
| Trade debtors | $406.0m | $536.0m | −$130.0m |
| Net debt | $1.4b | $1.1b | +$320.0m |
| Net debt / EBITDAF | 2.37x | 1.24x | Weakening |
| Gross borrowings | $1.6b | $1.3b | +$222.0m |
| Payout ratio vs NPAT | -85.3% | — | — |
| Payout ratio vs FCF pre-lease | 219.3% | — | not covered |
| ROE (annualised) | -5.1% | 5.2% | Weakening |
| HY25 share of FY25 revenue | 46.6% | — | Other half was 53.4% |
| HY25 share of FY25 EBITDAF | 42.1% | — | Other half was 57.9% |
| HY25 share of FY25 NPAT | 26.8% | — | Other half was 73.2% |
| Profit from continuing operations | −$452.0m | $429.0m | −$881.0m |
Reference: annolyse.ai/briefings/mel-fy25
This analysis was generated using Annolyse, an AI-powered tool that analyses NZX company announcements. The analysis is based on available company filings and standard Annolyse calculations. This is general information only and does not constitute financial advice. The analysis may contain errors. Always read the original company filings and consult a licensed financial adviser before making investment decisions.