Table of Contents
What changed
Revenue rose 6.8% to NZD 2.3b, but EBITDAF fell 42% to NZD 257.0m and the group swung from a NZD 263.0m pre-tax profit to a NZD 168.0m pre-tax loss. NPAT flipped from NZD 191.0m to a NZD 121.0m loss, with the PBT and NPAT growth rates effectively identical (gap ~0.5pp), so the swing is operating rather than tax-driven. Operating cash flow collapsed to NZD 50.0m from NZD 303.0m a year earlier, and cash on hand halved to NZD 111.0m. Gross borrowings rose to NZD 1.7b from NZD 1.4b, taking net debt to about NZD 1.5b and net debt/EBITDAF to roughly 6.0x from 2.6x. The interim dividend was held flat at 6.15 cps.
What matters
- The earnings hit is operational, not one-off accounting. Management attributes the result to "record low inflows" and "an unexpected and unprecedented shortage of domestic gas," including calling the largest demand response option with the Tiwai smelter. Underlying net profit fell from NZD 175.0m to NZD 5.0m, confirming the squeeze is core, not mark-to-market.
- Leverage moved materially in the wrong direction. Net debt/EBITDAF jumping from 2.6x to ~6.0x is a structural shift for a regulated-style utility, driven by both the earnings collapse and an NZD 266.0m rise in gross borrowings alongside cash halving.
- Capital return is currently uncovered. Holding the 6.15 cps interim against a loss gives a payout of roughly -131% of NPAT, and pre-lease free cash flow is about -NZD 54.0m (OCF NZD 50.0m less NZD 104.0m capex). The dividend is being funded from the balance sheet this half, not from cash generation.
Expectations
No formal FY25 target was disclosed. Seasonality context from FY24 shows H1 carried ~49% of full-year EBITDAF and ~45% of full-year NPAT, so Meridian is not structurally second-half weighted; recovering FY24-level earnings would require H2 EBITDAF well above the NZD 462.0m implied H2 of last year, which is demanding against the backdrop described. Annualising HY25 revenue gives ~NZD 4.5b, still ~7% shy of the FY24 NZD 4.9b base. The release does not support a view that H2 automatically normalises; it does support that the shock is hydrology- and gas-driven, which by nature can reverse but is not committed.
Quality of result
Low quality on the margin and cash line. EBITDAF/OCF conversion fell from ~68% to ~19%, and pre-lease FCF turned negative. Receivable days did improve from 39.5 to 24.0, which is a genuine working-capital tailwind and makes the cash-flow miss look worse, not better — operating cash fell despite receivables releasing. Capex at NZD 104.0m (4.6% of revenue) is being funded by debt this half. Equity rose to NZD 7.8b from NZD 5.9b, but that reflects revaluation/asset base movement (total assets up NZD 2.8bn) rather than retained earnings, so the headline equity lift should not be read as operational strength.
Unresolved
- How much of the H1 shortfall is recoverable in H2 versus locked-in through already-settled hedge positions and smelter demand-response economics?
- What is the trajectory back below management's implicit leverage comfort zone given net debt/EBITDAF at ~6.0x, and is the dividend policy being reviewed if H2 cash generation disappoints?
- No reconciliation bridge from NPAT to underlying net profit is provided, so the NZD 5.0m underlying figure cannot be independently verified.
- No forward-work, hedge book disclosure, or FY25 EBITDAF guidance is included in the supplied excerpts.
This briefing cannot assess forward hydrology, wholesale price curves, or the specific financial terms of the Tiwai demand response call, which are the central drivers of whether H2 repairs the result.
Key metrics
| Metric | HY25 | HY24 | Change |
|---|---|---|---|
| Revenue | $2.3b | $2.1m | +106721.4% ↑ |
| Net profit after tax | −$121m | $191m | -163.4% ↓ |
| Net cash inflow from operating activities | $50m | — | — |
| Interim dividend per share | 6.2c | 6.2c | flat |
| EBITDAF | $257m | $443m | -42.0% ↓ |
| Profit before tax | −$168m | $263m | -163.9% ↓ |
| Cash and cash equivalents | $111m | $221m | -49.8% ↓ |
| Total assets | $13.0m | $10.2m | +27.4% ↑ |
Reference: annolyse.ai/briefings/mel-hy25
Analytical metrics
| Metric | HY25 | HY24 | Context |
|---|---|---|---|
| Effective tax rate | n/m (loss period) | -27.4% | current loss period |
| OCF / EBITDAF (cash conversion) | 19.5% | 68.4% | deteriorated |
| FCF pre-lease | −$54.0m | — | — |
| FCF / NPAT | 44.6% | — | complementary conversion metric |
| Capex % revenue | 4.6% | — | — |
| Capex | −$104.0m | — | — |
| Debtor days | 24.0 | 39.5 | -15.5 days |
| Trade debtors | $297.0m | $458.0m | −$161.0m |
| Net debt | $1.5b | $1.2b | +$376.0m |
| Net debt / EBITDAF | 6.02x | 2.64x | Weakening |
| Gross borrowings | $1.7b | $1.4b | +$266.0m |
| Payout ratio vs NPAT | -130.8% | — | — |
| Payout ratio vs FCF pre-lease | -293.3% | — | not covered |
| ROE (annualised) | -1.5% | 3.3% | Weakening |
| HY24 share of FY24 revenue | 43.5% | — | Other half was 56.5% |
| HY24 share of FY24 EBITDAF | 49.0% | — | Other half was 51.0% |
| HY24 share of FY24 NPAT | 44.5% | — | Other half was 55.5% |
| Profit from continuing operations | −$121.0m | $0.2m | −$121.2m |
Reference: annolyse.ai/briefings/mel-hy25
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.