Meridian Energy Limited

Meridian reported first-half FY26 operating cash flow of $336 million and EBITDAF of $506 million. Compared with the prior equivalent period, operating cash flow was $286 million higher and EBITDAF was $249 million higher; compared with 1H FY24, operating cash flow was up $33 million (11%) and EBITDAF was up $63 million (14%). Underlying NPAT was $143 million versus a $5 million loss in the prior first half, while net debt was $1.7 billion and net debt-to-EBITDAF was 1.9x, down from 2.5x in June. The interim ordinary dividend rises 4% to $0.0640 per share, imputed at 85%, with a payment date of 24 March. Full-year EBITDAF guidance remains $311 million to $316 million, with current forecasting toward the top end, and CapEx guidance remains $330 million to $360 million. Management also reiterated that the business is preparing for substantial investment, including more than $1.2 billion across major renewable projects, though no near-term capital raise is required under the current plan.

Mike Roan framed the period as a recovery year supported by strong hydro and wind conditions, customer growth, and disciplined execution through the retail technology migration. Strategically, he emphasized that Meridian’s future value comes from building renewables, storage, and electrification demand, with a long pipeline of projects and a view that more generation should help lower energy prices and dry-year risk. His tone was confident and constructive, but he repeatedly tied the outlook to continued investment, consenting progress, and regulatory decisions on lines and transmission costs.

Mandy Simpson highlighted that operating cash flow of $336 million and EBITDAF of $506 million were both materially stronger year on year, with the comparison to FY24 showing the underlying business returning to a more normal earnings pattern. She pointed to higher contracted sales, 14% higher generation volumes, lower purchase and demand response costs, and record wet conditions as key drivers, while noting higher regulated transmission and distribution costs and project costs from Kraken. She also said the interim dividend is being lifted to $0.0640 per share, CapEx in the half was $86 million with $53 million growth CapEx, total borrowings were $1.9 billion, net debt was $1.7 billion, and the company successfully moved to a $1 billion committed syndicated bank facility and issued $350 million of 6.5-year green bonds.

Analysts pressed management on whether Meridian might need a capital raise, the economics of batteries and solar projects, the generation uplift from the planned Waitaki upgrade, and whether the company had changed its wholesale power price expectations. Management said no capital raise is needed under the current investment profile, and that existing and planned projects are affordable through debt markets, though a future raise could be considered if investment needs went beyond that. On batteries, Roan said Manawatu solar works on its own, but battery economics would need to improve before a 4-hour battery is approved; he also said the battery at Ruakaka is helping the North/South price spread even though arbitrage has been limited. Meridian kept its wholesale price outlook unchanged at $120 to $130 and said the Waitaki uplift is too early to quantify.