Customer Churn (FY2020 View)
Quote:
Originally Posted by
Snoopy
Why have I brought up this topic? Because Mercury thinks it is important!
According to AR2020 p7, the NPS for Mercury Energy is 13.7
For comparison:
1/ The Contact Energy 'Net Promoter Score' is 36 ( CEN AR2020 p12)
2/ The Meridian Energy 'Net Promoter Score' is 6 ( MEL PR2019 p11)
3/ The Genesis Energy Net Promoter Score is -4 (
https://customer.guru/net-promoter-score/genesis-energy)
4/ Trustpower Net Promoter Score is 40 (Infratil March 2017 Presentation)
A second key metric for Mercury Energy management is customer churn. Customer churn is the percentage of customers signing over to another electricity retailer over the financial year.
According to AR2020 p7, the 'trader churn' rate for Mercury Energy is 5.9%.
ADDED: The last customer churn rate I can find is from PR2017 p20. It is 15%
For comparison:
1/ Customer Churn rate at Meridian Energy is 14.2% ( MEL AR2020 p92)
2/ Customer churn rate at Genesis Energy is 15.8%
(https://www.genesisenergy.co.nz/about/media/news/genesis-delivers-earnings-of-$167-million)
3/ Customer Churn rate at Contact Energy is 16.4% (CEN AR2020 p23)
4/ Customer churn rate at Trustpower is 17% (TPW AR2020 p27)
SNOOPY
Brand Strength (FY2020 Perspective)
Quote:
Originally Posted by
Snoopy
A second key metric for Mercury Energy management is customer churn. Customer churn is the percentage of customers signing over to another electricity retailer over the financial year.
The third key metric for Mercury is 'Brand Strength'. According to the Glossary in AR2020 p96
"This measures a brands equity and perception in the market based on a monthly survey. It is a constructed score derived from 5 pillars that are weighted to reflect their impact on the overall Brand Strength. It is reported on a 3 month rolling average and reflects Mercury's Brand Strength amongst customers and non-customers."
Now I would love to tell you what all that means, but I have no idea. And if Mercury aren't going to tell us then I guess we will never know. Anyone out there ever taken part in one of these monthly surveys?
SNOOPY
The complete 'Special Dividend' story
Quote:
Originally Posted by
Ferg
I have removed special dividends given they are one off in nature and not part of forward growth.
I firstly took the same view as Ferg regarding 'special dividends'. However, more recently I took the opposite view and decided to include the historical special dividends in my future dividend payment forecasting. Not saying Ferg is wrong as I can see the case for both opinions. But right now I am in the 'include special dividends' group.
Out of curiosity I went back to investigate what management said about each special dividend that has already been paid to share holders at the time,
11th December 2014: Special Dividend 5cps ($69m). A successful $300m Capital Bond Offer made the dividend 'part of the capital management plan'.
(from https://stocknessmonster.com/announc...cy.nzx-257282/) (also AR2015 p15).
During this year (FY2015), the closure of the Southdown gas fired power station was announced and a write down of $44m was taken
30th September 2015 Special Dividend 2.5cps ($34m). "part of an ongoing focus on capital management while retaining some balance sheet flexibility. (AR2015 p15)
30th September 2016 Special Dividend 4.0cps ($56m). "Continuing focus on active capital management and limited requirement for growth capital". (AR2016 p8).
During the year, $13m was received from disposals of land, including parcels around the site of the former Marsden Point power station to the office of treaty settlements.
29th September 2017 Special Dividend 5.0cps ($70m). "No value enhancing investments were found and the proceeds of (surplus) carbon credit sales were received" (AR2017 p14) (cash proceeds of $26m and profit of $5m). The surplus carbon credits were no longer needed due to the shutting down of Southdown.
One thread that goes through the whole time that special dividends were being paid was Southdown. Nevertheless if we consider in FY2014, the initial write-down of Southdown, that loss more than wipes out any downstream subsequent profits to EOFY2017. So it seems the more likely explanation for 'surplus capital' is the acquisition of the alternative funding mechanism of debt on favourable terms.
Given that $300m of Capital Bonds at 3.6% funding have replaced the $300m of July 2019 bonds funded at 6.9% and a smaller $31m of Wholesale Bonds at 8.21% have also rolled off during this financial year, my opinion is that once Turitea is up and running, the special dividends could resume. There is also a speculative special dividend of some 10cps awaiting if MCY were to sell their Tilt Renewables stake. So is it wrong to leave the special dividends out when MCY has an historical precedent for paying them as 'capital management' is adjusted?
SNOOPY
BT 1/ Strong (Top 3) position in chosen market: FY2020 perspective
Quote:
Originally Posted by
Snoopy
'Mercury Energy', the former 'Mighty River Power' have a goal to be "New Zealand's leading Energy Brand". Mercury reported they gained a net 16,000 customers over FY2017. Mercury generated 19% of NZs power over FY2017 and supplied power to 14% of all retail customers.
End of financial year 2017 figures:
https://www.emi.ea.govt.nz/Retail/Re...ucture,p|1,v|3
shows that Mercury's sold 19.0% of power generated, only behind Contact Energy (20.4%) and Genesis Energy (24.5%), well clear of Meridian Energy in fourth place.
The tangible expressions of the 'leading energy brand' aim, can be covered in three 'foundation principles'.
1/ Well being of Mercury Energy people (measured engagement is now 81%, up from 79% the previous year) and customers (level of switching to other retailers is 17.8%, claimed to be the lowest of the big players). Perhaps some of the secrets of keeping customer engaged are 'Airpoints', 'Free Power days' (offered over the phone as part of the 'personal touch') and 'Fixed Price Contracts' to provide certainty. 34% of residential and 63% of commercial customers are signed up for those! Mercury have financially supported the development of the walking/cycling recreational trail along the Waikato River.
2/ Respect for "kaitiakitanga' (custodianship of equal resources). The Waikato river catchment, which houses all of Mercury's hydro dams, is ecologically monitored by Mercury. This includes monitoring of riverbed sediment and the riverbanks including downstream of Karapiro the 'last in line' hydro dam. Mercury keeps compliance with 121 hydro related consents and can mitigate the effects of flooding and droughts by controlling water release from the Waikato dam system.
"Kaitiakitanga' also covers working with the 'Waikato Tainui', 'Raukawa', 'Ngati Tahu - Ngati Wharoa' and 'Ngati Tawharetoa' iwi. These iwi relationships also cover the tribal geothermal resources harnessed by Mercury Energy in geothermal plant joint ventures.
3/ Making commercially astute decisions: Mercury have an integrated management approach to the operation of their hydro and geothermal stations.
Conclusion: Pass Test
Mercury Energy is one of the top four gentailers servicing the New Zealand energy market. It is number three in terms of customers but it is not in the top three in terms of energy generation. However, Mercury's mission, "To be New Zealand's leading energy brand" is not just dependent on sales and generation numbers.
|
No. NZ Customers EOFY2020 |
NZ Power Station Electricity Generation (TWh) |
Contact Energy |
510k |
8.5 |
Genesis Energy |
435k |
6.8 |
Mercury Energy |
348k |
6.3 |
Meridian Energy |
324k |
14.2 |
From a customer perspective, the three primary goals are to have low 'customer churn', a high 'net promoter score' and good 'brand strength'. The comparisons I make are with the other NZ gentailers.
Customer Churn (refer my post 1334)
With a probable figure in the low to mid 15 percent range (the actual figure has not been released for a few years), Mercury is likely in second place, behind Meridian at 14.2% but ahead of Genesis at 15.8%.
Net Promoter Score (refer my post 1328)
Mercury is in third place with a score of 13.7, behind Trustpower on 40 and Contact Energy on 36
Brand Strength (refer my post 1338)
Mercury have not revealed the five key pillars they use to measure this. However, I do believe their bright yellow branding gets attention. And the 'kiss oil goodbye' campaign, along with Mercury Energy's poster car for electric transport Evie (A 1957 Ford Fairlane Convertible converted to electric power) certainly sticks in my memory.
CONCLUSION: Pass Test
SNOOPY