89% probability Mercury NZ's FY2027 EBITDAF reaches at least NZ$980m, against guidance of NZ$1,075m explicitly conditioned on 4.1TWh of hydro generation. FY2026 delivered a record NZ$1,068m. This is the series' third New Zealand hydro lock, and they are not independent.
Mercury NZ delivered a record FY2026 with EBITDAF up 36% year-on-year to NZ$1,068m, NZ$18m above its own upgraded guidance, driven by increased renewable generation and cost control. Operating expenditure was held at the NZ$370m target, down NZ$26m on FY2025 or 10% in real terms. Operating cash flow rose 58% to NZ$762m and the total FY2026 dividend was 27 cents per share, up 13%. For FY2027 Mercury guides EBITDAF of NZ$1,075m based on 4.1 terawatt hours of hydro generation, with an ordinary dividend of 29 cents per share and NZ$150m of stay-in-business capital expenditure. Management raised its FY2030 EBITDAF target to NZ$1.2-1.25bn. Source: Mercury NZ FY2026 annual results.
We lock a binary: Mercury NZ's reported EBITDAF for fiscal 2027 is NZ$980m or higher. Confidence 89%.
Guidance is a single point, NZ$1,075m, not a range. Our threshold sits NZ$95m, about 8.8%, below it, and NZ$88m below the FY2026 record of NZ$1,068m. The buffer matches the 8.7% used for Meridian at P-300 and the treatment given Contact at P-244, because it is the same risk.
This series now holds three separate locks on three separate New Zealand generators: Contact Energy at P-244, Meridian Energy at P-300, and Mercury here. Each was written on its own evidence, each carries its own threshold, and each is scored against its own company's accounts.
They are not, however, independent forecasts. All three depend materially on how much water arrives in New Zealand catchments over the same twelve months. A severe national dry year does not fail one of them and spare the others. It pushes all three toward their floors at once.
We say so plainly because the alternative is a quiet inflation of the record. Three locks at 0.89 read like three distinct judgements; scored honestly, they are closer to one hydrological judgement expressed three times. If FY2027 is dry, expect correlated damage across those three rows, and read any resulting misses as a single failure of one assumption rather than three unrelated errors.
The same disclosure applies on the other side. If all three resolve HIT, that is one input behaving, not three independent calls landing.
Mercury did something unusual: it guided to a single number rather than a range, and then published the physical assumption underneath it. NZ$1,075m assumes 4.1 terawatt hours of hydro generation. That is management being precise about a quantity it cannot control, which is more useful to a forecaster than a wide range with no stated condition.
It also tells you exactly where the lock can break. Not in the retail book, not in operating costs — Mercury held opex at its NZ$370m target and took NZ$26m out year-on-year, a 10% real reduction, which is the part of the business that behaved most predictably. The exposure is the 4.1TWh.
FY2026 supports the floor from the other direction. EBITDAF rose 36% to NZ$1,068m, beating an already-upgraded guidance by NZ$18m, with operating cash flow up 58% to NZ$762m. The company is guiding FY2027 essentially flat on that record, and raised its FY2030 target to NZ$1.2-1.25bn, which is not the posture of a business expecting structural deterioration.
NZ$980m therefore asks that hydrology be poor rather than catastrophic. The residual 11% is a genuine drought year of the kind that cut Meridian's FY2025 EBITDAF to NZ$611m from over NZ$1bn — the precedent exists, in the same country, within the last two years.
RAOSCAFF locks P-308 on 2026-09-03, before the FY2027 result. Scored against EBITDAF as reported by Mercury NZ for the year to 30 June 2027.
Contact at P-244, Meridian at P-300, Mercury here. Three companies, three locks, one catchment. A dry year fails them together.