Contact Energy Limited Analysis

Overview

Contact Energy was formed in February 1996 when it acquired electricity generation and gas assets from state-owned electricity generator ECNZ. Subsequent expansion put the company in the forefront of electricity generators in NZ. It is strongly positioned in wholesale gas distribution, gas retailing and electricity retailing.

Performance

The following information was extracted from Contact Energy Limited's half year results, released 16 February 2026:

Key strategic highlights

Launched Contact31+ strategy to lead New Zealand’s renewable energy future.

• Completed Manawa acquisition; more than 80% of announced cost synergies secured to date.

• Offer made to purchase the remaining 25% of King Country Energy.

• Glenbrook-Ohurua battery, Kōwhai Park solar and Te Mihi Stage 2 geothermal builds on track.

• Contracted 50MW HFO[iii] to manage dry year risk and support security of supply.

• More than 150,000 customers taking advantage of off-peak energy through Time-of-Use plans.[iv]

• Launched The Good Initiative; more than 15,000 customers and nearly 50 community groups supported.

• $525 million equity raise announced to advance the execution and potential upsizing of renewable energy projects which would accelerate the Contact31+ strategy:

• Confirmed investment in a new 200MW battery, Glenbrook battery 2.0.
• Contact board-approved investment in the 150MWac Glorit solar farm JV.[v]
• Pre-FID drilling on Tauhara 2 geothermal to advance steamfield development and explore upsizing target capacity to 60-70MW.

Financial performance

Contact Energy has reported net profit of $205m in 1H26 and operating earnings (EBITDAF) of $500m. The period includes the acquisition of Manawa Energy from 11 July 2025, which contributed to the uplift in earnings. Reported figures also include $22m of Manawa transaction and integration costs. Excluding these costs, EBITDAF was $522m, up 26% on 1H25.[vi]

The improved operating result was driven by a significant lift in renewable generation, with output 97% renewable in 1H26. This reflected the addition of the Manawa hydro assets and its contracted PPAs (wind and geothermal) totalling 1.3TWh, along with a full period of generation at Contact’s new Te Huka 3 geothermal plant. Higher renewable output supported increased contracted sales. Pricing was lower on CFD sales as well as gas purchases and acquired generation, all of which were elevated in 1H25 when fuel was scarce.

With national hydro inflows in 1H26 at 128% of mean, and New Zealand’s hydro storage ending the period 129% of mean, market conditions contrasted sharply with those of 1H25.

The acquired Manawa irrigation business contributed to a lift in other income. In 1H25 other income was affected by losses on the sale of excess gas to Methanex. Operating costs reflected the combined operations of Contact and Manawa. More than 80% of cost-reduction synergies have been secured on a run-rate basis, with $6m recognised in 1H26 within other operating costs.