Power firms tipped to pay a record $1.4 billion to shareholders

Thursday, 14 August 2025

Contact Energy and Genesis Energy, owner of the Huntly Power Station, pictured, are expected to be the best performers this year. (File photo)

Join the conversation in the comments below

The country’s big four power companies are expected to announce a record payout of more than $1.4 billion to shareholders when they report their annual results over the next two weeks.

That would be more than their forecast combined net profit of just under $1.3b, marking another year when they would effectively be dipping into their pockets to support shareholder returns despite political pressure to further step up their investment in new generation.

Broker Forsyth Barr said it had been a “challenging year” for Mercury, Meridian, Contact and Genesis, which are collectively valued at about $35b on the NZX.

It is forecasting their combined operating profit will be down about 8% on last year at $2.6b, in part due to two dry spells when hydro intakes were low.

But it isn’t expecting any of them to cut their dividends and is predicting a “bounce back” in earnings in the new financial year that started last month.

Stats NZ reported that electricity companies increased their prices by an average of 4.9% in the three months to the end of June, which it said was the largest quarterly increase in more than 10 years.

Contact Energy will kick off the reporting season for the generators on Monday, when it is expected to report about a 6% increase in its annual net profit to about $380m and hike its total annual dividend pay-out by two cents a share to 39c.

Meridian will close out the reporting season on August 27 with a weaker result, but is nevertheless expected to keep its dividend stable.

It has been a tough 12 months for electricity users, but payouts to shareholders in the big four power firms aren’t expected to miss a beat. (File photo)

The businesses’ work on new generation had not gone to plan in the six months to the end of June, Forsyth Barr said in a research note.

“Contact has faced significant consenting challenges, with its Southland wind farm turned down, and it has an ongoing stoush over the consenting of its Glorit solar farm in Northland.

“Two projects Meridian Energy had hoped to get to financial close are still being worked on – the Te Rere Hau wind farm re-powering and Nova Energy solar joint venture.”

The gentailers will be reporting their results as ministers continue to debate the recommendations of a study the Government commissioned into the sector from British consultant Frontier Economics.

Commerce Commission chairperson John Small warned in May there was “quite a strong incentive for the established generators to keep the market short”, echoing concerns previously voiced by some major power users.

Small said he was somewhat sceptical market mechanisms would completely solve that problem.

Last month, organisations representing businesses and consumers urged Prime Minister Christopher Luxon to take urgent action to “reshape the energy market”, querying why forward prices for electricity were significantly above the cost of production.

Forsyth Barr said the challenge for the sector would be to “try and take some heat out of the debate” and push back on any measures that might be counterproductive.

Comments are moderated during working hours and may not appear immediately.