Contact Energy has reported a transformational year with net profit of $423 million for FY26, representing a 62% increase from the prior year’s $261 million. This strong performance was underpinned by the successful completion of the Manawa Energy acquisition in July 2025, which immediately expanded the company’s renewable generation portfolio. The company’s underlying EBITDAF reached $1,011 million, up 31% from $774 million, while operating free cash flow surged 49% to $648 million, demonstrating robust cash generation and improved operational efficiency across the combined business.
The integration of Manawa has proven highly effective for Contact Energy investors. The acquired hydro assets and contracted power purchase agreements contributed 2.4 terawatt hours of output in the year to June 2026, while Contact’s Te Huka 3 geothermal plant ran for a full period, pushing total renewable output to 98% of generation. Notably, the company has already captured $22 million of its targeted $28 million in cost-reduction synergies on a run-rate basis, achieving 100% of its integration goals. These synergies are meaningful for the combined business going forward and provide a foundation for sustained profitability.
Market conditions in FY26 proved more benign than the challenging prior year. National hydro inflows reached 118% of historical mean levels, and New Zealand’s storage finished at 135% of mean, easing the supply constraints that had lifted prices in FY25. Reflecting this normalisation, average electricity prices declined to $140 per megawatt hour from $157, while the company reduced costly external generation and gas purchases. This pricing pressure was offset by higher renewable output and improved operational leverage from the larger asset base, allowing Contact to maintain earnings growth despite a more competitive wholesale market.
Contact Energy is actively building flexibility into its generation mix, having brought its first 100 megawatt battery online and commenced construction on a further 200 megawatts. The company is also progressing geothermal development with Te Mihi Stage 2 under construction and Tauhara 2 drilling advanced. Solar projects are moving through commissioning, with investment in the Glorit solar project secured. Consent has been granted for the Southland Wind Farm, which offers a pathway to supply a potline at New Zealand Aluminium Smelters. These investments position Contact to capture value from New Zealand’s ongoing transition to renewable energy and from the country’s industrial electrification opportunities.
Earnings per share grew 27% to 41.5 cents from 32.7 cents, reflecting the profit growth and successful integration. The company’s average return on invested capital improved to 5.9% from 4.9%, though investors should note this remains modest in the current interest rate environment. Contact Energy has demonstrated effective capital deployment and integration execution in FY26. Key developments to monitor include progress on battery storage expansion, commissioning of solar assets, and early performance metrics from the Southland Wind Farm development. The company’s ability to maintain margin in a normalised pricing environment while funding renewable growth will be crucial for shareholder returns. This announcement is price sensitive and has been flagged as material by the ASX.
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About Contact Energy Limited (ASX: CEN)
Contact Energy Limited generates and sells electricity and natural gas in New Zealand through both wholesale and retail segments. The company owns and operates hydro, geothermal, and thermal power stations that produce more than 25% of New Zealand’s electricity, and retails these services along with broadband to nearly half a million customers.
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