2019 Annual Results Presentation 26 AUGUST 2019
Highlights record NZ hydro 13% Australasian NZ HR diversity & generation customer growth inclusion award fairer, clearer 59% shareholder refreshed brand pricing return and visual identity market leading 26% EBITDAF carbon neutral NPS 1 growth Consumer NZ Energy Retailer of the Year Low Carbon Future Award 1 net promoter score 26 AU G U ST 20 19 20 19 AN N U AL RESU LTS PRESEN TATION 2
Our people � 98% gender pay equity Workforce measures � YWCA equal pay award 120% FY19 FY18 � Gender Tick accreditation � Targeting 40% of women in leadership and 90% 98% 98% senior specialist positions by 2020 78% 77% 60% � Diversity and inclusion award at the 2019 NZ HR Awards 45% 42% 30% 35% 33% � Nine day work fortnight at Manapōuri � Reshaped Customer Care work week 0% Women in the Women in Engagement Gender pay � Changes in the Executive business senior roles equity � 8 LTI injuries in FY19, highest in 10 years Source: Meridian 26 AU G U ST 20 19 20 19 AN N U AL RESU LTS PRESEN TATION 3
Our strategy Our purpose: Clean energy for a fairer and healthier world. Our strategy: Champion Grow Support retail Grow overseas the benefits NZ retail. growth and protect earnings. of competitive our generation • Simpler systems • Grow customer numbers in markets. legacy. Australia, maintaining our • Reduced cost vertically integrated position • Faster adaptation • Competing vigorously Demonstrating the contribution • Flux global growth. • Relentless focus on of hydro to New Zealand’s • Leadership in sustainability customer experience 100% renewable aspiration, in New Zealand and Australia • Deployment of maintaining a best-in-class • Supporting wholesale liquidity. New Zealand’s most generation portfolio (safety, loved energy brands. efficiency and cost), best-placed renewable energy pipeline. 26 AU G U ST 20 19 20 19 AN N U AL RESU LTS PRESEN TATION 4
Champion Our sustainability leadership the benefits of competitive markets Helping our customers � Replaced unfair prompt payment discounts with fairer, clearer pricing � Tailored payment plans, LevelPay, hardship Our key sustainability goals: support SDG13 Climate Action. SDG7 Affordable and Clean Energy. Helping the climate � Net Zero Carbon across group emissions � Planting 1,000ha of forest, starting at A new brand, articulating what we stand for: Manapōuri Taking climate action through generating � Aiming to halve operational emissions by 2030 100% renewable energy � Published NZ’s first climate risk report (TCFD) While making a difference to people � Strong climate advocacy, 100% renewable And the environment generation 26 AU G U ST 20 19 20 19 AN N U AL RESU LTS PRESEN TATION 5
Champion New Zealand demand the benefits of competitive markets � Underlying demand growth of 0.3% in FY19 Meridian demand forecasts TWh � Growth across sectors, lower seasonal 75 full decarbonisation agricultural load (incl. broader conversion efficiency gains) � Smelter off-take up 4% in FY19 with 4 th 65 partial decarbonisation potline � Decarbonisation is expected to support 55 medium term demand growth 45 underlying electricity demand Annual national consumption (to March 19) +0.9% Annual change (incl. demand side efficiency) GWh +2.3% 14,727 16,000 12,699 +0.4% 35 12,000 9,556 1998 2003 2008 2013 2018 2023 2028 2033 2038 2043 2048 Financial Year ended 30 June 8,000 Source: Meridian -6.1% +0.0% 2,353 4,000 751 0 Residential Commercial Agriculture/ Industrial Other Forestry/ Source: Ministry of Business, Fishing Innovation and Employment 26 AU G U ST 20 19 20 19 AN N U AL RESU LTS PRESEN TATION 6
Champion New Zealand supply the benefits of competitive markets � Multiple Pohokura outages coincided with New Zealand lake storage Pohokura outages periods of low inflows and thermal outages Actual Average GWh 4,000 � This fuel scarcity pushed wholesale spot and forward electricity prices higher during FY19 3,000 � Longer term supply has to manage existing South thermal retirement and renewable Island 2,000 repowering Generation plant end of life profile MW 1,000 600 Gas Coal/Gas Geothermal Wind Diesel North 500 Island 0 400 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19 300 Source: NZX, Meridian 200 100 0 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 Source: Meridian 26 AU G U ST 20 19 20 19 AN N U AL RESU LTS PRESEN TATION 7
Champion New Zealand policy and regulation the benefits of competitive markets TPM Meridian's annual HVDC costs $M Meridian actual � EA recently published proposed TPM 120 106 amendments 100 � Proposes replacing current HVDC charge EA estimate 70 with benefit–based and residual charges 80 EA estimate 60 41 EPR 40 � Electricity Price Review panel delivered its 20 final report and recommendations to the 0 Minister in late May 2019 2022 status Proposed quo (RCP3) (2024?) Source: Electricity Authority, Meridian Other � A number of wholesale market policy developments underway 26 AU G U ST 20 19 20 19 AN N U AL RESU LTS PRESEN TATION 8
Champion New Zealand policy and regulation the benefits of competitive markets Zero carbon � Zero Carbon Bill at Select Committee � Targeting net zero GHG emissions (excluding methane) by 2050 � Targeting a gross reduction of methane emissions of 24%- 47% below 2017 by 2050 � Establishes a new independent Climate Change Commission Interim Climate Change Committee � ICCC report released in July � Recommends accelerated electrification, strong RMA direction for wind development, value of hydro in freshwater decisions Emissions trading scheme � Multiple ETS reforms, including industrial allocation phasedown from 2021 26 AU G U ST 20 19 20 19 AN N U AL RESU LTS PRESEN TATION 9
Grow New Zealand customers New Zealand retail � Customer number and sales volume growth Customer numbers Sales volume Average price Customer sales (ICPs) (GWh) ($/MWh) across all segments (except Agri sales) FY19 � Headlined by 4% sales growth in both Residential 201,730 1,431 residential and small medium business Small medium business 40,749 975 Agricultural 37,736 1,055 � Competitive pressure in those segments Large business 19,244 441 reflected in a 3% average price decrease Total Residential/SMB 299,459 3,902 $114 � Meridian residential discounts replaced with Corporate 2,818 2,338 $89 simple lower rates FY18 � Higher wholesale forward prices lifted Residential 194,671 1,370 average corporate sales price by 7% Small medium business 38,137 936 � Commenced NZ’s largest commercial solar Agricultural 37,752 1,085 programme with Kiwi Property Large business 17,807 432 Total Residential/SMB 288,367 3,823 $117 Corporate 2,389 2,158 $83 26 AU G U ST 20 19 20 19 AN N U AL RESU LTS PRESEN TATION 10
Grow New Zealand customers New Zealand retail � Increasing NPS 1 , declining churn rates NPS - difference to industry average 75 Meridian Powershop � 6% lower cost to serve per customer +43 +41 50 +33 � 10k Meridian customers migrated to the Flux higher 25 +6 +2 platform, targeting 50k by December 2019 not 0 measured 2017 2018 2019 � Flux global customer base of 300k Financial Year ended 30 June Source: Meridian ICP churn - difference to industry average Meridian Powershop 10% +3% +4% +1% Retail cost to serve FY17 FY18 FY19 lower 0% Retail costs excl. metering $65M $68M $66M Other segment cost $15M $15M $16M -10% allocation higher -9% -20% -13% -14% Year end customer numbers 276,767 290,756 302,277 2017 2018 2019 Financial Year ended 30 June Cost to serve per customer $290 $287 $271 Source: Electricity Authority 1 net promoter score 26 AU G U ST 20 19 20 19 AN N U AL RESU LTS PRESEN TATION 11
Support retail New Zealand generation and protect our generation legacy � Record hydro generation year from 104% NZ average generation price $/MWh inflows and with Ōhau A refurbishment 140 123 � Ōhau refurbishment programme going well, 120 $8m more spend ($57m total) 100 83 � More modest wind generation 68 80 � Major HVDC pole outages planned between 57 51 60 January to April 2020 (Saturdays) 40 20 0 2015 2016 2017 2018 2019 Financial Year ended 30 June Source: Meridian 26 AU G U ST 20 19 20 19 AN N U AL RESU LTS PRESEN TATION 12
Support retail New Zealand generation and protect our generation legacy � Hawkes Bay wind consent variation Otahuhu ASX futures settlement price submitted, EOI for civil works commenced $/MWh 150 � Wind development pipeline of ~2,700 GWh 130 � Waitaki 2025 re-consent expected to be lodged early 110 � Lingering sentiment from gas supply issues 90 � Upcoming Pohokura and Kupe outages 70 50 Q3 2019 Q1 2020 Q3 2020 Q1 2021 Q3 2021 Q1 2022 Q3 2022 29 June 2018 28 September 2018 3 January 2019 29 March 2019 31 July 2019 Source: ASX 26 AU G U ST 20 19 20 19 AN N U AL RESU LTS PRESEN TATION 13
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