Contact Energy Strengthens Renewable Expansion With NZ$525m Raise

About Contact Energy Limited

Contact Energy Limited (NZX: CEN, ASX: CEN) is one of New Zealand’s largest integrated electricity generators and retailers, supplying electricity, natural gas and LPG to residential, commercial and industrial customers across the country. The company operates a diversified generation portfolio spanning geothermal, hydro and thermal assets, with a growing focus on renewable development as New Zealand transitions toward a lower-emissions energy system.

With the acquisition of Manawa Energy completed in July 2025, Contact has materially expanded its hydro footprint and reinforced its strategic objective of delivering sustainable, renewable-led growth. The company’s Contact31+ strategy focuses on disciplined capital allocation, earnings growth and accelerating renewable generation to meet forecast demand growth driven by electrification and decarbonisation.

The 1H26 result highlights improving market conditions, strong operational performance and a decisive step-up in investment across solar, battery storage and geothermal infrastructure.

Financial Performance

For the six months ended 31 December 2025, Contact reported EBITDAF of NZ$500 million, up 24 per cent from NZ$404 million in the prior corresponding period. Excluding Manawa transaction and integration costs of NZ$22 million, EBITDAF reached NZ$522 million, representing growth of 26 per cent.

Net profit increased 44 per cent to NZ$205 million, while operating free cash flow strengthened 80 per cent to NZ$249 million. Earnings per share rose to 20.9 cents.

Revenue for the half totalled NZ$1.617 billion. Wholesale segment earnings benefited from stronger renewable production and improved hydro inflows compared with the prior year, when elevated fuel costs pressured performance.

The balance sheet expanded following the Manawa acquisition, with total assets reaching NZ$9.7 billion at 31 December 2025. Net borrowings increased to NZ$3.165 billion, including a €500 million Euro medium-term note maturing in 2032.

Renewable Generation and Operational Performance

Operational conditions improved significantly in 1H26. National hydro inflows were 128 per cent of historical mean levels, with hydro storage ending the period at 129 per cent of mean. Renewable generation represented 97 per cent of Contact’s total output.

The acquisition of Manawa added contracted hydro generation of approximately 1.3TWh, while Te Huka 3 geothermal contributed its first full reporting period.

Integration of Manawa is progressing ahead of expectations, with more than 80 per cent of anticipated cost synergies now secured on a run-rate basis. Approximately NZ$6 million of synergy benefits were recognised during the half.

Accelerating Renewable Investment

Contact’s board approved Glenbrook battery 2.0, a 200MW / 400MWh battery energy storage system located near Auckland. Combined with the existing 100MW facility nearing commissioning, total capacity at Glenbrook will increase to 300MW. The project has an estimated capital cost of NZ$235 million and is expected to be operational in early 2028.

The company also confirmed a final investment decision for the 150MWac Glorit solar farm, developed through a 50/50 joint venture with Lightsource bp. The project carries an estimated cost of NZ$305 million and is expected to be more than 70 per cent project financed. Commissioning is targeted for 2028.

In geothermal, Contact has commenced a NZ$30 million drilling programme at Tauhara 2. Updated reservoir modelling indicates potential capacity of 60 to 70MW, above initial estimates.

Capital Management and Equity Raise

To fund this accelerated investment programme, Contact announced a NZ$525 million equity raise, comprising a fully underwritten NZ$450 million placement and a retail offer of up to NZ$75 million.

Proceeds will support Glenbrook battery 2.0, the Glorit solar development, geothermal expansion and provide flexibility to pursue additional renewable opportunities under the Contact31+ capital allocation framework.

The placement price of NZ$8.75 per share represented a modest discount to the prevailing market price at launch.

The company continues to operate within its Sustainable Finance Framework, with the majority of borrowings classified as Green Debt Instruments aligned with renewable investment.

Retail and Demand Management

Retail connections increased by approximately 31,000 compared with 1H25. More than 150,000 households are now on Contact’s Time-of-Use ‘Good’ plans, benefiting from lower off-peak pricing. Since launch in 2021, customers have collectively received more than 345 million hours of free power.

The Hot Water Sorter demand-response programme has expanded to 26,000 homes, shifting approximately 9MW of peak demand each day and enhancing system flexibility.

Outlook

Management expects New Zealand grid demand to increase by 3–5TWh over the next five years, driven by electrification, population growth and industrial development.

With hydro storage levels normalised, renewable expansion underway and Manawa integration progressing, Contact appears well positioned to capture this demand growth while supporting New Zealand’s transition to a predominantly renewable electricity system.

The interim dividend was maintained at 16 cents per share, reflecting confidence in earnings sustainability.