EBITDAF nearly doubled to $506m as hydrology normalised after HY25 shock

Management cites record wind generation, the second-best lake inflows on record, and record retail sales volumes (+12%). NPAT followed at $227m versus a $121m loss (+287.6%), with the 1.1pp gap to PBT growth indicating no meaningful tax distortion.

Revenue, however, fell 11.0% to $2b – classified as below the company's recent historical range (3-period mean +12.1%) – because lower wholesale price exposure and the absence of the prior-period hedge cost recovery compressed the top line even as margin expanded sharply.

Operating cash flow leapt to $336m from $50m. Net debt/EBITDA strengthened to 3.33x from 6.0x, and the interim dividend rose 4.1% to 6.4 cps.

PBT growth of 288.7% sits well above the company's historical range (3-period mean -43.6%), but it comes off a HY25 base depressed by record-low inflows, an unprecedented domestic gas shortage, and the calling of the largest demand response option with NZAS. EBITDAF margin recovery to a 15.8% PBT margin (upper edge of the historical 3-period range) is real, but the lift is largely the absence of last year's exceptional cost rather than a step-change in underlying economics.

Cash conversion swung dramatically but off a distorted base. OCF/EBITDA at 66.4% versus 19.5% looks transformative, yet the prior reading was abnormally low because of hedge settlement costs. The current 66.4% sits below typical gentailer norms, so cash quality has recovered rather than become outstanding.

Leverage strengthened despite higher absolute borrowings. Net debt/EBITDA fell to 3.33x – within the company's historical range (mean 3.62x) – purely because EBITDAF rebased upward. Absolute net debt still rose to $1.7b from $1.5b, and total assets are now $15.1b, materially above the historical mean of $11b, reflecting an expanding balance sheet supporting growth capex.

The supplied seasonality shape shows HY25 contributed only 42.1% of FY25 EBITDAF and 46.6% of FY25 revenue – an unusually back-end-loaded year because of the HY25 hydro shock. With HY26 EBITDAF of $506m already exceeding the implied 2H FY25 EBITDAF of $354m, the read into the full year depends on whether second-half hydrology and wind conditions hold and whether retail volume growth (+12%) sustains.

The release flags an indicative growth capex range of $315–$345m and a target FID in Q4 2026, signalling continued capital intensity ahead. This matters because the leverage improvement is EBITDAF-driven; if hydrology mean-reverts, the 3.33x ratio will widen against a higher absolute debt base.

The $485m PBT swing decomposes into the unwind of HY25's exceptional hedge and demand response costs plus favourable hydrology and wind conditions – none of which the company controls period-to-period. Underlying retail volume growth (+12%) and regulated transmission revenue (+6.6–6.8%) are the more durable contributors, but they are not sized in the available excerpts.

Cash quality is supportive without being exceptional. FCF pre-lease of $250m converted at 110.1% of NPAT, helped by capex falling to $86m (4.3% of revenue) from $104m. Working capital was broadly stable: trade receivables held at $295m and debtor days at 26.7 (lower edge of the historical 24.0–39.5 range), so the cash beat was not balance-sheet-assisted.

The 74.4% NPAT payout sits within the company's historical range, but on an underlying basis – stripping out fair-value movements management explicitly excludes – the dividend cover read is harder to verify from the disclosed excerpts.

This briefing cannot assess forward hydrology, wholesale price paths, or the underlying (ex-fair-value) NPAT bridge, none of which are quantified in the supplied excerpts.