An outage at the Loy Yang coal-fired power plant hurt AGL Energy's first-half profit. Image by Julian Smith/AAP PHOTOS

economy, business and finance

AGL Energy posts 19.6% drop in H1 profit

2020-02-13 12:09:00

AGL Energy’s half-year profit has fallen 19.6 per cent and the company has reduced its interim dividend payout, hurt by weaker power prices and an outage at its Loy Yang coal-powered plant in southeastern Victoria.

Underlying net profit, which omits one-off items, for the six months to December 31 fell to $432 million from $537 million last year.

The profit, however, beat Morgan Stanley’s estimates of $363 million.

AGL also announced that its underlying full-year profit would be in the upper half of the previously announced range of $780 million to $860 million.

At 1020 AEDT AGL shares were up 5.2 per cent at $20.53.

“Our 2020 half-year results reflects a disciplined approach to executing our strategy and operating the business amid increasing challenges,” chief executive Brett Redman said.

Australia’s top power producer declared an interim dividend of 47 cents per share, smaller than the 55 cents per share a year ago.

AGL’s net cash from operating activities rose 67 per cent to $1.13 billion, and its energy customers rose by 36,000 to 3.7 million in the period.

Mr Redman said simpler pricing had improved customer retention and reduced complaints.

He said it the “dawn of the battery age” and AGL was taking a leadership position both at the residential and wholesale level.

“Consumer interest is accelerating and we are responding,” he said.

AGL has agreements with six different battery projects in southeastern Australia, the company said.

Overall 83.5 per cent of the 21,793 gigawatt hours of electricity generated by AGL during the half-year came from coal, mostly at its Loy Yang, Liddell and Bayswater plants.

Mr Redman said existing renewable projects, including its own, had been struggling to be economically viable with wholesale electricity prices declining.

“We’re seeing a lot less renewable projects coming through” because backer can’t make a business case for them, he said.

But he said gas-fired plants were playing a somewhat similar role in providing power while reducing carbon emissions.

AGL said its $295 million Barker Inlet Power station near Adelaide was completed late last year with a full operational handover occurring January 28.

The 210-megawatt power station is the first new gas generation plant in Australia’s National Electricity Market in seven years.

AGL calculates that Barker Inlet has a carbon intensity score of 0.44 – a ratio of carbon dioxide emissions per megawatt hour of electricity produced – compared to 1.25 for Loy Yang.

AGL said it was modelling several policy scenarios related to global reductions in carbon emissions, including one aligned with the goals of the Paris agreement.

-AAP/Reuters