Meridian Energy Ltd (ASX: MEZ) shares are sliding toward a 52-week low after investors reacted coolly to the company's latest results announcement.
Despite customer growth, the market response has been muted. During afternoon trading, Meridian shares have drifted toward their 52-week low, losing almost 1% at $4.41.
Over the past 12 months, Meridian shares have dropped 11%, trailing the S&P/ASX 200 Index (ASX: XJO), which has risen 10% over the same period.
Here's what stood out from today's update and what it could mean for Meridian shares.
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Customer growth, retail sales down
The ASX energy company released its operating update for February 2026. It showed customer growth of 2.1% during the month and a year-to-date lift in total water inflows.
However, retail sales volumes in February were 2.7% lower than a year ago, mainly from reduced irrigation demand.
Meridian CEO Mike Roan said:
Although inflows eased during February, this is the first below-average month in the past six. Storage levels remain robust, leaving the system well placed heading into autumn. Our retail growth remains strong. While lower irrigation demand saw sales volumes dip marginally year-on-year, customer numbers increased 2.1% during February, lifting total growth to nearly 20% over the past year, adding further scale and momentum to our Retail business.
Key player Kiwi clean energy
Meridian is one of the largest electricity generators in New Zealand and is heavily focused on renewable energy.
The $6 billion Meridian share primarily generates power from hydro and wind, selling electricity to wholesale markets and to residential and business customers through its retail brands.
Because its generation portfolio is almost entirely renewable, Meridian is often viewed as a key player in New Zealand's transition to cleaner energy.
Low operating costs, strong margins
One of Meridian's biggest advantages is its renewable generation base. Hydro and wind assets can deliver low operating costs once built, which can support strong margins when electricity prices are favourable.
Another positive is Meridian's expanding retail customer base. Recent gains in market share and strong customer growth have helped drive higher electricity sales volumes.
Weather risks and lower demand
At the same time, the earnings of Meridian shares can be highly sensitive to external factors. Electricity prices, water inflows into hydro lakes, and weather conditions can all influence generation and profitability.
The company is also exposed to broader electricity demand trends. Recent data showed national electricity demand in New Zealand was slightly lower than a year earlier, which can pressure pricing and sales volumes.
What next for Meridian shares?
In the near term, Meridian shares could remain volatile as investors assess the outlook for electricity prices and renewable generation.
The latest results showed Meridian returning to profitability with strong operating earnings. However, falling retail sales in February and softer wholesale power prices may continue to weigh on sentiment.
Longer term, however, Meridian's renewable energy portfolio and growing retail customer base could position the company to benefit from the global shift toward cleaner electricity.
