Australia’s AGL Energy fails to see profits on generator failure and price drop

  • Full-year profit below analysts’ estimate, shares down nearly 5%
  • A$125 million one-time charge related to the failed split
  • Co Sees Higher Realized Prices in FY23, CEO Says
  • Outcome of strategic review, earnings guidance expected in September

Aug 19 (Reuters) – Australia’s main power producer AGL Energy Ltd (AGL.AX) said on Friday its full-year profit had more than halved and fell short of market expectations due to lower wholesale prices power in the first half and an outage at its Victoria station.

The company’s shares fell 4.8% to A$7.77 in first trades, hitting their lowest level since April, while the broader market (.AXJO) traded down 0.1%.

AGL recorded a one-time charge of A$125 million ($86.44 million) for the spin-off of its coal production and retail businesses which it exited in May.

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The company was planning the split under pressure from its biggest shareholder, Mike Cannon-Brookes, who wants the nation’s biggest carbon emitter to speed up the shutdown of its coal-fired plants.

AGL said its strategic review was “progressing well” and would present results along with profit guidance in September as part of efforts to shore up a business hit by power plant outages and government pressure to cut back. retail prices.

Profits in 2022 were hit by the outage at Loy Yang A power station in Victoria, which the company had estimated would cost A$60 million before tax. Read more

AGL’s bottom line did not reflect the spike in energy prices seen after Russia invaded Ukraine due to the company’s hedging position.

“AGL’s position was largely hedged when wholesale prices were lower…this resulted in a lower average realized wholesale price in FY22 compared to the prior year,” said the managing director Graeme Hunt.

“As these historically low-priced hedge positions gradually fade, AGL will see the recent rise in market prices translate into higher realized prices beyond FY23.”

The company, which rejected an A$5.4 billion takeover bid earlier this year, reported attributable underlying after-tax profit of A$225 million for the year ended June 30, missing analyst estimates of A$234.4 million, according to Refinitiv data. Annual revenue, however, rose 20.8% to A$13.22 billion. Read more

($1 = 1.4461 Australian dollars)

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Reporting by Harshita Swaminathan; Editing by Aditya Soni and Subhranshu Sahu

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