Advertisement

Even our biggest power generator bears scars of ‘unprecedented’ six months

Australia’s largest generator AGL Energy has posted a slump in full-year profit amid “unprecedented” market conditions even as it continues to search for a new boss.

Aug 19, 2022, updated Aug 19, 2022
The bid for AGL and its power stations signals a massive acceleration of the renewables debate. (Image: supplied).

The bid for AGL and its power stations signals a massive acceleration of the renewables debate. (Image: supplied).

“The second half has been one of the most challenging and complex periods in AGL’s operating history,” outgoing CEO Graeme Hunt told an investor briefing on Friday.

Hunt said the selection process to appoint a new chair is “well-advanced” and would be announced before an annual general meeting in November, and the global search for a managing director and chief executive officer was still underway.

The leadership team quit after billionaire shareholder Mike Cannon-Brookes scuppered the energy giant’s planned demerger, which would have created an energy retailer and hived off ageing coal-fired operations.

Hunt also disclosed the Newcastle liquefied natural gas storage facility near Tomago has been pulled from the market after an unsuccessful sale process.

AGL’s bottom line net profit for the 2021/22 financial year was $860 million, including $486 million on impairments, revalued contracts, and costs associated with its cancelled restructure.

Underlying net profit slumped 58 per cent to $225 million and underlying earnings before interest, taxes, depreciation and amortisation was $1.22 billion, down 27 per cent from a year ago.

Shares in AGL fell 5.3 per cent or 44 cents to $7.72 in afternoon trade on a cloudy outlook.

Quizzed by analysts about the lack of guidance for 2022/23, Hunt said “we’re not looking, at this point in time, at a major step up in earnings year on year”.

“Liddell comes out, Loy Yang 2 was out for majority of the first quarter and clearly we had a challenging July,” he said.

Victoria’s Loy Yang is on track to be back online next month, with the outage forecast to cost AGL $60 million.

The Liddell power plant in NSW will close in April 2023 after 50 years in operation and be replaced with a big battery that is three times the size of Tesla’s plant in South Australia.

Planning approval has also been secured for the 200MW Loy Yang grid-scale battery project.

InQueensland in your inbox. The best local news every workday at lunch time.
By signing up, you agree to our User Agreement andPrivacy Policy & Cookie Statement. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

The 250 megawatt Torrens Island grid-scale battery storage project near Adelaide is anticipated to be operational in the first half of 2023, AGL said.

Meanwhile, a final investment decision has been reached on the Broken Hill battery project as AGL looks to plug 850MW of big batteries into the national electricity market by 2024.

The board review of how an integrated AGL will operate continues, with initial outcomes due at the end of September, along with detailed guidance on the year ahead.

Moody’s Investors Service analyst Sarah Xie said AGL’s heightened exposure to ESG (environmental, social and governance) and energy policy changes remain a key challenge.

Earnings pressure will likely ease in 2023/24 but this would depend on the reliability of the increasingly unpredictable coal-fired assets, she said.

Mr Hunt said the FY22 underlying profit was within market guidance, despite challenging conditions that intensified in the second half.

“Other factors that negatively impacted the result included planned and unplanned plant outages, unprecedented market volatility and suspension, milder weather, increased residential solar volumes and margin compression via customer switching,” he said.

Total generation volumes were broadly flat from 2020/21 at 40,755GWh.

AGL will pay a final dividend of 10 cents per share brings the total for the year to 26 cents per share, unfranked.

Local News Matters
Advertisement

We strive to deliver the best local independent coverage of the issues that matter to Queenslanders.

Copyright © 2024 InQueensland.
All rights reserved.
Privacy Policy