AGL Energy (ASX:AGL) talks 1H17 results and outlook


by Carolyn Herbert

AGL Energy Limited (ASX:AGL) Chief Financial Officer, Brett Redman discusses the company’s half-year results ended 31 December 2016 and outlook.

Our first-half results for FY17 are showing the progress that we’ve made on our strategic imperatives, which are to embrace transformation, drive productivity and unlock growth.

The big improvement year-on-year, which has delivered a four per cent improvement in underlying profit, has come through the wholesale electricity part of our business. Where the strategic acquisitions we’ve made in the last few years into generation, around Loy Yang and Macquarie, which our shareholders supported us in through equity raising at the time, are really benefitting from rising prices. That’s more than offset the negative trend that we’ve seen coming through in wholesale gas.

We’re looking ahead to the second half of the year with confidence as well. So our guidance range for underlying profit between $720 million and $800 million, subject to normal trading conditions, we’re now expecting to be in the upper half of that range.

We’re really pleased to announce our dividend of 41 cents is an improvement of about nine cents or a third, compared to last year. It reflects we’re putting into place, the changes to our dividend policy that we announced at the last AGM, which is the target of 75 per cent payout ratio of underlying profit, a minimum of 80 per cent franked.

Shareholders would normally expect to see a final dividend at the end of the year, to be greater than the interim dividend, obviously subject to normal trading conditions and the Board’s discretion. We’re able to do this, because we’re seeing strong underlying cash flows for the business that are allowing us to support a better dividend, for our shareholders.

We announced at the AGM that we would be buying back up to five per cent of our shares on market. What we found is the company is in a very strong cash position. And after allowing for cash reserve for good growth activities in the future, we’ve looked for the best way to return money to shareholders. We think an on market buyback is the best way to do that.

Looking ahead, the forward market for wholesale electricity prices is rising. With our big generation position as I mentioned earlier on, we’ve got big exposure to that change. It means the outlook for the company is positive. We’ll be back again in August to present our four-year results.


Carolyn Herbert

Finance News Network
Carolyn joined FNN in August 2015 as the Head of News and also presented the Market at Midday and the Market Wrap. With more than five years of broadcast journalism experience, Carolyn has worked as a finance anchor on the Sky News Business channel and as an anchor and reporter for ABC News. She is also a qualified corporate lawyer specialising in IPOs, takeovers and mergers and acquisitions.