Why is the Mercury share price on watch?
Mercury this morning provided its quarterly update for the period ended 31 March 2021 (Q3 2021). The company highlighted persistent dry conditions and price uplifts as key factors in the latest numbers.
Mercury’s hydro generation increased by 8.5% over Q3 2020 figures to 910 gigawatt hours (GWh) despite Waikato catchment inflows being 168GWh below average. Those higher production numbers came as the company responded to higher spot prices in the market. Notably, Mercury’s hydro generation forecast remains unchanged at 3,800GWh for the full year.
Below average national hydro storage inflows for the quarter caused total hydro storage to decline. Hydro storage fell 1,818GWh below average by the end of the quarter as a result of the conditions. Combined with thermal fuel constraints at key gas fields, these low inflows helped push spot prices higher.
The Mercury share price slumped 3.3% lower yesterday to close at $6.18 per share. Shares in the Kiwi ‘gentailer’ will be worth watching again today after the latest update on trading performance and expected conditions.
Mercury said its sale portfolio further tilted towards commercial and industrial during the quarter. Total sales volumes in this segment increased by 16.1% to 858GWh in Q3 2021. However, Mercury reported a national demand decrease of 1.4% in Q3 2021 compared to the prior corresponding period.
Reduced demand in the industrial (-0.9%) and irrigation (-0.4%) sectors played a key factor in the quarterly results. Mercury also noted smaller shifts in urban (-0.1%), rural (-0.2%) and dairy (+0.2%) in the latest quarter.
What about the Tilt Renewables deal?
The Mercury share price is on watch, particularly given the company’s other activities right now. That includes forming a part of the AGL Energy Ltd (ASX: AGL) led consortium looking to purchase Tilt Renewables Ltd (ASX: TLT).
On Friday, the big news was that the QIC/AGL/Mercury group had upped their offer for Tilt to $8.10 per share.
Canadian pension fund CDPQ had made a last-ditch attempt to snatch Tilt for $8 per share before the trans-Tasman group upper their price. Importantly, the revised bid also removed a provision allowing Tilt to assess competing proposals.