AGL profits powered by wholesale prices
Energy retailer AGL’s profit has lifted its reported annual profit threefold to $1.6 billion courtesy of hedging boosts but underlying profit is also higher.
James HallAustralian Associated PressAugust 9, 20184:44pm
AGL has boosted full-year profits courtesy of a surge in wholesale power prices which helped counter lower retail earnings.
The energy retailer's underlying profit for the year to June 30 was up 27.6 per cent to $1.023 billion, while revenue grew 1.8 per cent to $12.816 billion.
Consumer electricity earnings fell from $104 per customer account on average in 2016/17 to $48 for the year just ended.
Higher operating costs and competition squeezed AGL's earnings from consumer customers to $175 million, down from $379 million in 2016/17 and $399 million in 2015/16.
However AGL lifted its underlying profit thanks to strong earnings growth in wholesale electricity sales.
AGL chief Andy Vesey said shareholders had benefited from recent high wholesale prices but acknowledged higher market prices were having an impact on household cost-of-living pressures.
The gross margin for wholesale electricity jumped by $668 million to $2.217 billion, while gas wholesale margin was up $130 million to $432 million.
"This increase in prices in the broader electricity market has mostly been a result of the abrupt closure of non-AGL power stations such as Hazelwood in 2017 and Northern in 2016 and higher input costs for coal and gas," Mr Vesey said in a statement.
"In this environment, we recognise that many Australian households are facing cost-of-living pressures because of the higher energy bills that have resulted from higher market prices."
AGL announced a new $50 million relief package for customers struggling with power bills, with features including cancellation of debts that are more than a year overdue.
Mr Vesey also urged the adoption of the federal government's National Energy Guarantee (NEG) plan for the nation's energy security.
"While wholesale electricity prices have already begun to fall over the past 12 months, policy certainty is key to encouraging the additional generation supply that will place further downward pressure on prices and benefit consumers over time."
The energy retailer's statutory net profit for 2017/18 surged to $1.587 billion, nearly three times higher than the year before due to changes to valuations of hedging contracts.
AGL forecast underlying profit of between $970 million to $1.070 billion in 2019, slightly above its forecast 2017/18 range.
AGL shares ended down 90 cents, or 4.1 per cent, to $21.11.
AGL'S PROFIT BOOST
* Net profit after tax up 194.4 per cent to $1.587 billion
* Underlying net profit after tax up 28 per cent to $1.023b
* Revenue up 1.8 per cent to $12.816 billion
* A final dividend of 63 cents per share, franked at 50.4 cents