Mercury NZ's sale of its 19.9 per cent stake in Tilt Renewables boosted its bottom line for the first half while underlying earnings fell due to dry conditions and an outage at its Kawerau geothermal plant. 

The power company's net profit after tax was $427 million, up $297m on the previous year, largely due to the $367m net gain on the sale of the Tilt stake. 

Underlying earnings - normalised net profit after tax - fell 23 per cent to $89m. 

Mercury declared an 8.0 cents per share dividend, representing an increase of 18 per cent, and reflecting an expected lift in earnings. 

The company's full-year EBITDAF guidance remained at $570m, reflecting impacts of the Tilt Renewables and Trustpower retail acquisitions and excluding likely interim insurance payment arising from Kawerau station outage. 

It had been a period of significant change for Mercury – including becoming New Zealand's largest wind generator. 

Chief executive Vince Hawksworth said settlement of the Tilt transaction and the Turitea North wind farm reaching full generation, as well as the closeout of a legacy contact with Norske Skog, all shaped Mercury's half-year results as it positioned itself for growth. 

"Within the last six months, Mercury has transformed from a company with no wind generation to the largest wind generator in New Zealand," Hawksworth said. 

In August, Mercury completed the acquisition of Tilt's New Zealand wind farms, and within the remaining period progressively brought the Turitea North wind farm on stream. 

Together the assets would significantly diversify Mercury's revenue streams. 

The Turitea South wind farm is scheduled for completion in mid-2023, which will make Turitea New Zealand's largest wind farm. 

Meanwhile, the acquisition of Trustpower's retail business would be another significant milestone for Mercury. 

During the period Mercury also negotiated the early exit of a foundation hedge with pulp and paper company Norske Skog. 

The settlement of the wider transaction and its associated accounting impacts reduced the half year's EBITDAF by $50m. 

Mercury said exiting this contract allowed Mercury to recontract this volume at a price more reflective of the current market. 

The half year's EBITDAF was $242m, $48m down on the prior year, recognising acquisition accounting for Tilt and the close-out of the Norske Skog contract. 

Mercury acquired Tilt's New Zealand operations including future development options for $797m in August 2021, funded from the sale of its Tilt shareholding and a cash cost of $634m. 

For the six months, Mercury said sustained dry conditions across the Waikato catchment reduced hydro generation. 

The 44-day outage at Kawerau geothermal power station also extended into the start of the financial year and coincided with high spot prices.