Manawa Energy Posts NZ$3.3 Million Loss Amid Wild Winter Electricity Market Conditions

Highlights:

• Significant Loss Amid Market Volatility: Manawa Energy Limited (NZX: MAN) posted a NZ$3.3 million loss after tax for the first half of FY2025, a sharp contrast to its NZ$55.9 million profit in the prior year.
• Adverse Weather and Supply Constraints: The company faced a "perfect storm" with record low hydro inflows, reduced wind output, and constrained gas supply, driving up wholesale electricity prices and impacting production volumes.
• High-Cost Hedging: To cover production shortfalls, Manawa engaged in costly hedging strategies, further straining finances amid elevated gas prices and supply limitations.

Challenging Market Conditions Impact Manawa’s First-Half Results

Manawa Energy Limited (NZX: MAN) has reported a NZ$3.3 million loss after tax for the first half of FY2025, a significant drop from the $55.9 million profit recorded in the same period last year. At the time of writing, the New Zealand-based company attributes the downturn to unusually volatile winter conditions that affected both production and pricing in the electricity market.

Low Hydro Inflows and High Wholesale Prices Create “Perfect Storm”

The generation-only energy company faced a "perfect storm" of adverse conditions, including historically low hydro inflows, low wind production, and limited gas supply. These factors led to record-high wholesale electricity prices, pressuring Manawa Energy’s profitability. To manage the shortfall in production, the company had to hedge its position, a strategy that further impacted its financial results.

Hedging Costs Add to Financial Pressure

In response to the reduced production capacity, Manawa Energy engaged in hedging to meet its supply commitments. However, this strategy came at a high cost due to soaring gas prices and the broader energy supply constraints in New Zealand. This environment of limited resources and rising operational costs contributed significantly to the company's challenging financial position in the first half of the fiscal year.

Outlook Remains Focused on Market Recovery

Despite these challenging conditions, Manawa Energy aims to navigate market volatility and optimize its operations. The company is closely monitoring hydro inflows and gas supply dynamics, while also exploring measures to stabilize production and pricing. With New Zealand’s energy sector facing similar pressures, Manawa Energy remains committed to adapting its strategy to mitigate future risks and drive long-term growth.

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