AGL Energy reports losses due to write-downs, expects strong recovery

Company News

by Glenn Dyer

AGL Energy (ASX:AGL), a prominent player in the energy sector, faced a significant financial setback in the fiscal year ending on June 30, largely attributed to the anticipated write-downs on its coal power generating assets. The company disclosed a substantial statutory loss of $1.264 billion in its annual results announced on Thursday.

However, the energy provider also revealed that its underlying profit demonstrated a resilient recovery, aligning with the guidance previously shared with the market in June.

AGL's underlying after-tax result showcased an impressive 25% increase, reaching $281 million. This performance stands in contrast to the previous fiscal year of 2021-22 when market volatility surged due to events such as the Russian invasion of Ukraine, consequently driving energy prices, particularly for coal and gas, to rapid escalations. During that period, the company's underlying EBITDA rose by 13%, reaching $1.361 billion for the year ending on June 30.

Shareholders are set to receive a total payout of 31 cents per share (unfranked) for the year, including a final dividend of 23 cents per share (unfranked).

Looking ahead to the current financial year, AGL Energy projects a significant improvement in its earnings. The company issued a guidance range for underlying EBITDA spanning between $1.875 billion and $2.175 billion. This represents a substantial 36% increase at the lower end of the range compared to the figures of 2022-23.

The guidance range for underlying net after-tax profit was also announced, positioned between $580 million and $780 million. This outlook reflects more than a twofold increase compared to the outcomes of 2022-23.

Damien Nicks, AGL's CEO, expressed his perspective on the company's financial performance. He stated, "AGL’s financial result for FY23 reflects a strong second half following a challenging start to the year, which was impacted by volatile energy market conditions and forced plant outages, including the prolonged outage of Loy Yang Unit 2."

Nicks further elaborated, "We saw a significant improvement in plant availability as the year progressed, which contributed to the increase in earnings compared with FY22, along with the strong performance of our well risk-managed gas portfolio and customer business."

He concluded by expressing optimism for the coming fiscal year, "We expect this positive momentum to continue into FY24, as indicated by our earnings guidance which is unchanged from our announcement in June 2023."

Despite the setbacks of the past year, AGL Energy appears poised for a rebound, with its strategic plans and optimistic outlook for the future intact.

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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