Latest / Best of Business / Neal Barclay: Meridian CEO on the company's profit reaching $429 million

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Neal Barclay: Meridian CEO on the company's profit reaching $429 million · Best of Business

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  Speaker 1: You're listening to a podcast from Newstalk Z'B. Follow this
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  Speaker 2: Meridian Energy has quadrupled its net profit to four hundred
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  Speaker 2: and twenty nine million dollars for the year. Earnings we're
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  Speaker 2: up sixteen percent. The company will pay a dividend of
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  Speaker 2: twenty one cents a share. Company is tempering expectations, though,
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  Speaker 2: saying the twenty twenty five financial year is looking far
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  Speaker 2: more challenging. Neil Barclay is Meridian's chief executive and with us, Hey, Neil, hi,
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  Speaker 2: how are you? Yeah?
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  Speaker 3: Good?
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  Speaker 2: Thank you?
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  Speaker 3: Ah.
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  Speaker 2: It's kind of awkward, isn't it to be to be
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  Speaker 2: reporting a big profit increase like this when everybody's just
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  Speaker 2: hating on Gen Taylor's.
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  Speaker 3: Yeah, well, I think the thing to understand with our numbers, well,
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  Speaker 3: we are a renewable energy generator, so our results swing
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  Speaker 3: around a lot with the weather. And the interesting thing
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  Speaker 3: about the growth in this year's number, it's largely because
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  Speaker 3: last year's number was very low at ninety five million,
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  Speaker 3: and actually f Y twenty four is pretty consistent with
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  Speaker 3: what FY twenty two in f y twenty one, where
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  Speaker 3: so it was more we have a bit of a
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  Speaker 3: low number in twenty three than we had massed growth
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  Speaker 3: in twenty four.
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  Speaker 2: So you're not making any more of us than you normally.
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  Speaker 3: What are you saying, Well, not in that year, but
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  Speaker 3: certainly right now we are. Earnings are down quite a lot.
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  Speaker 3: We're investing a lot in hedges and so forth to
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  Speaker 3: sort of ensure that we've got security of supply, and
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  Speaker 3: I think I'm going to talk to you about some
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  Speaker 3: of those last week. But the ends are still we're
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  Speaker 3: paying them to reduce demand. We're part of that method
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  Speaker 3: X arrangement. We were actually paying quite a lot of
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  Speaker 3: quite a high price for the gas that we're generating
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  Speaker 3: from them at the moment, and so we're telling analysts
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  Speaker 3: and investors just to be a bit tempered with how
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  Speaker 3: it will turn out this year.
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  Speaker 2: Why do you think next year is looking so bad?
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  Speaker 2: What's the problem.
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  Speaker 3: It's just that there is not enough the lakes at
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  Speaker 3: a very low level, so we've had to back off hydrogeneration,
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  Speaker 3: and so we're by this is from a Meridian perspective,
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  Speaker 3: we're buying generation from other sources. That's what I'm saying.
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  Speaker 3: We're part of that method. Next thing welso paying for
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  Speaker 3: the ends, it's not to actually produce.
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  Speaker 2: So, Neil, do you foresee that we're going to have
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  Speaker 2: a dry year next year? Again? No, No, the lakes,
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  Speaker 2: I'm not that clear, boy, not a problem.
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  Speaker 3: I can't guarantee that either. I can't pack the weather
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  Speaker 3: that far out. I can pick the weather about seven
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  Speaker 3: days out and that's about as good.
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  Speaker 2: Will then tell me this, okay, because you guys obviously
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  Speaker 2: do keep an eye on what's going on with the
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  Speaker 2: hydro dams. Do you feel completely comfortable about dipping in
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  Speaker 2: knowing that next year will be fine?
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  Speaker 3: Well, we've got enough hedges, and hedges are designed to
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  Speaker 3: get a physical reaction, so that's either dropped demand or
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  Speaker 3: bring on other supply. We've got enough hedges in place
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  Speaker 3: right now to restore these lakes back to average if
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  Speaker 3: we get average in Plose.
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  Speaker 2: Okay, so to hang, yes totally. But it does rely
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  Speaker 2: on us having average and so we are kind of
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  Speaker 2: at the mercy of the weather again, aren't we.
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  Speaker 3: We always have been. That's the nature of our electricity
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  Speaker 3: system at hydro based and we've got relatively small lakes,
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  Speaker 3: but you know, and we're working to try and get
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  Speaker 3: more capacity in those lakes, so that's that contingent storage Neil.
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  Speaker 2: One of the criticisms, one of the criticisms of the
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  Speaker 2: energy sector at the moment is that you guys aren't
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  Speaker 2: building enough generation. How much generation have you built in
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  Speaker 2: the last year.
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  Speaker 3: Well, I'll tell you, I'll go back fifteen years because
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  Speaker 3: I think.
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  Speaker 2: That because the last year doesn't look good.
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  Speaker 3: The last year looks good. We've just built a new
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  Speaker 3: wind farments in Hawk's Bay, Horror Parky. We're in the
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  Speaker 3: middle of building a grid scale battery. We've invested a
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  Speaker 3: billion dollars in the last few years. Just Meridian, if
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  Speaker 3: you look across the sective numbers a lot greater. But
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  Speaker 3: if if you look at the electricity sectory the last
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  Speaker 3: fifteen years, demand hasn't grown a bit. The system is
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  Speaker 3: exactly the same size as it was fifteen years ago.
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  Speaker 3: But in that time the sector across the board has
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  Speaker 3: invested ten billion dollars in new renewable energy and that's
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  Speaker 3: replaced aging coal and gas light plant. So we've been
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  Speaker 3: invested in a halib rate. It's just an absolute myth
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  Speaker 3: that generators have not been investing in It's just wrong,
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  Speaker 3: and it just keeps getting put.
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  Speaker 2: Out there by c It has generation not dropped off
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  Speaker 2: since the Labor Party of twenty seventeen, the Labor Government
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  Speaker 2: of twenty seventeen putting that one hundred percent renewable targeting.
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  Speaker 3: No what, no renewables kept being developed.
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  Speaker 2: The problem plus sorry I should say plus also the
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  Speaker 2: Onslow decision.
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  Speaker 3: Yeah, the problem there was that not as much investment
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  Speaker 3: went into gas as needed to. And so that's that's
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  Speaker 3: fundamentally the problem. I mean, we were always going to
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  Speaker 3: have droughts and wet dimes and all that sort of stuff.
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  Speaker 3: It's just part of our system. We used to managing it.
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  Speaker 3: What got what I think, what caught us all up
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  Speaker 3: this year was just the rate of decline and gas survailability.
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  Speaker 3: And so yeah, when you saw those high prices a
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  Speaker 3: few weeks back, eight hundred bucks, that was because Faranaki,
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  Speaker 3: which is a diesel based generator was running. That drove
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  Speaker 3: those high prices. Since then, we've got method next to
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  Speaker 3: the table. We've got ends this off. Things are moderating back.
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  Speaker 3: They're they're still reasonably high, sort of circuit two three
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  Speaker 3: hundred dollars, But if we can continue to build back
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  Speaker 3: these lakes, that will start to moderate as well.
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  Speaker 2: Nearly you would all worried about what might happen to
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  Speaker 2: your business based on what's going on in politics at
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  Speaker 2: the moment, and they need to find somebody to scapego.
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  Speaker 3: No, No, I think the system works well. I think
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  Speaker 3: the politicians understand that. But obviously we've got a lot
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  Speaker 3: of work to do to sort of resolve this gas issue,
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  Speaker 3: and that's why we've been talking about the ler G option.
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  Speaker 3: It may be an expensive option, but I think it'd
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  Speaker 3: be a critical bit of infrastructure that will provide a
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  Speaker 3: lot more resilience, not only to the electricity sector, but
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  Speaker 3: all those gasues is out there are who are currently
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  Speaker 3: being mentioned as well.
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  Speaker 2: Yeah, Hey, Neil, thank you very much. Beast of luck
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  Speaker 2: with you. Everything is Neil Barkley, Meridian's chief executive.
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