AGL swings back to profit, bases positive outlook on higher power prices
AGL has swung to an interim profit and expects continuing higher power prices to boost its full-year result.
Utility AGL has swung to profit in the first half, aided by a sharp reduction in impairments.
For the six months to December 31, AGL booked a $325 million profit, a sharp turnaround from last year’s $449m loss.
The group’s underlying profit, which strips out one-off items, edged up 3.7 per cent to $389m, with the boost pinned on higher electricity prices and cost reduction activities.
Its earnings were, however, kept in check by softer gas margins.
AGL (AGL) said it now anticipated full-year underlying profit to come in at the upper end of its guidance range of $720m to $800m given the robust first-half result.
Analysts had already pencilled in such a potential outcome, with current estimates pointing to underlying profit for FY2017 of $770m.
Revenue for the half-year jumped 7.7 per cent to $6.03 billion.
“AGL has achieved a strong financial result for the first half and our projected transformation, productivity and performance improvement initiatives are on track,” chief executive Andy Vesey said.
“We continue to work hard to reduce key areas of uncertainty and to address key long-term strategic imperatives in relation to prospering in a carbon-constrained world, building customer advocacy and driving growth.”
Mr Vesey spruiked a positive outlook, in part due to expectations electricity prices would stay elevated.
“In our electricity portfolio, the impact of rising wholesale prices is expected to continue,” he said.
“The forward curve points to sustained improvement, although the impact will continue to be phased over time due to competition, customer affordability considerations and the timing of rollover of our contracted positions.”
AGL will deliver a 41c a share interim dividend, up 9c on last year. It will be 80 per cent franked.