Contact Energy: H1 Earnings Up 26% on Renewables & Manawa Acquisition | 2026 Guidance Raised
- Contact Energy has reported a significant surge in first-half profit, alongside plans to raise NZ$525 million to accelerate investment in renewable energy projects.
- Underlying profit climbed 24 percent to $500 million, driven by a substantial increase in renewable generation.
- Excluding the Manawa-related expenses, Contact Energy’s earnings before interest, tax, depreciation, amortisation, and financial instruments (ebitdaf) reached $522 million, a 26 percent increase.
Contact Energy has reported a significant surge in first-half profit, alongside plans to raise NZ$525 million to accelerate investment in renewable energy projects. The company’s net profit for the six months ending , rose by 44 percent to NZ$205 million, despite a 5 percent dip in revenue.
Underlying profit climbed 24 percent to $500 million, driven by a substantial increase in renewable generation. This performance included the full contribution from the recently acquired Manawa Energy, purchased on . The acquisition and subsequent integration costs amounted to $22 million.
Excluding the Manawa-related expenses, Contact Energy’s earnings before interest, tax, depreciation, amortisation, and financial instruments (ebitdaf) reached $522 million, a 26 percent increase. This positive result has prompted the company to raise its normalised 2026 ebitdaf guidance by $15 million to $995 million.
The NZ$525 million capital raise will be achieved through an underwritten placement of $450 million in ordinary shares at $8.75 per share, and a non-underwritten retail offer of up to $75 million. The placement represents a 7.2 percent discount to the ex-dividend adjusted closing price of $9.43.
Contact Energy’s strategy, dubbed “Contact31,” focuses on driving growth in the renewable energy transition through to 2031. The raised capital will be directed towards expanding and potentially increasing the scale of renewable energy projects. Specifically, the company has confirmed investment in a 200MW battery, Glenbrook Battery 2.0, and a joint venture for the 150MW Glorit solar farm near Auckland.
Contact Energy has initiated pre-final investment decision (FID) drilling on the Tauhara 2 geothermal site, with the potential to increase the steamfield’s capacity to between 60-70MW. The company’s renewable output reached 97 percent during the first half, reflecting the addition of Manawa’s hydro assets and power purchase agreements (PPAs) for wind and geothermal energy, totaling 1.3 terawatt hours (TWh). Generation at the Te Huka 3 geothermal plant also contributed significantly.
The company noted a 3.7 percent increase in total national electricity demand, rising by 0.8 TWh. However, demand at the Central North Island node decreased by 24 percent following the closure of the Winstone Karioi pulp mill and Tangiwai sawmill in , highlighting challenges faced by wood and paper processing industries without fixed-price electricity contracts. Conversely, demand in South Canterbury increased by 9 percent, driven by seasonal irrigation needs and population growth.
Contact Energy, the sole major power generator not partially government-owned, reported that over 150,000 customers are utilizing off-peak energy pricing through time-of-use plans. The company has set an interim dividend of 16 cents per share, imputed to 56 percent or 9 cents per share for qualifying shareholders.
Looking ahead, Contact Energy anticipates increasing its total dividend to 40 cents per share in the 2026 financial year, and between 41 and 42 cents per share in 2027. The company is positioning itself to meet anticipated growth in New Zealand’s electricity demand, forecasting an increase of 3-5 TWh over the next five years, and has plans for an additional $2.4 billion of renewable energy projects.