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Wholesale margins push AGL profit higher

Prashant Mehra  |  08 Feb 2018Text size  Decrease  Increase  |  
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SYDNEY - [AAP] Energy producer and retailer AGL Energy (ASX: AGL) says it is on track to deliver a full-year underlying profit of close to $1 billion after posting a very strong first-half result.

Australia's second largest energy retailer says half-year profit had nearly doubled to $622 million, with the company benefiting from high wholesale electricity prices and gains from hedging activities.

Its underlying profit, which excludes significant items, was up 27 per cent to $493 million for the six months to December 31, while revenue was up seven per cent at $6.45 billion.

Chief executive Andy Vesey says the results provide a solid foundation for the full year.

"This strong first-half result reflects disciplined capital allocation and the continued strength of our wholesale markets business," he said.

Underlying earnings from its wholesale markets business jumped 25 per cent to $1.23 billion, which more than offset a decline in earnings at the smaller customer markets segment that was affected by lower margins in the gas business.

The company has been under pressure from the federal government to keep its ageing Liddell coal-fired power plant in NSW running beyond 2022 in an effort to cap the increase in electricity prices, but it rejected the demand in December.

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AGL has committed to replace the power station's current output with a mixture of gas, wind and solar plants.

On Thursday it reaffirmed its expectations for full-year underlying profit to between $940 million and $1.04 billion.

"This guidance reflects expectations of continued margin growth in the wholesale markets business offsetting current margin and cost pressures in customer markets," it said.

The company will pay an 80 per cent franked interim dividend of 54 cents per share, up 13 cents from a year ago.

AGL ENERGY HY PROFIT SOARS

* Net profit up 91pc to $622m

* Revenue up 7.0pc to $6.45bn

* Interim dividend up 13 cents to 54 cents per share, partially franked

 

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is a freelance journalist.

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© 2021 Australian Associated Press Pty Limited (AAP) or its Licensors. This is the Morningstar service with content provided by AAP where indicated. AAP reserves all rights, including copyright, in services provided by it. The information in the service is for personal use only, does not constitute financial product advice (whether general or personal) and may not be re-written, copied, re-sold or re-distributed, framed, linked or otherwise used whether for compensation of any kind or not, without the prior written permission of AAP. You should seek advice from a professional financial adviser before making decision to acquire or dispose of a financial product.

This service is published for general information purposes only without assuming a duty of care. AAP is not in the business of providing financial product advice (whether personal or general advice), and gives no warranty, guarantee or other representation about the accuracy of the information or images contained in this service. AAP is not liable for errors, omissions in, delays or interruptions to or cessation of the services through negligence or otherwise. The globe symbol and "AAP" are registered trademarks.

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