Throughout the period, there have been “many positives”, Mr Redman said. AGL, a major owner of coal-fired power stations around Australia, said it was building a stronger and broader business amid “ongoing uncertainty for our sector”. In particular, it has been positioning itself as a market leader in battery technology, inking two deals during the half-year period to build grid-scale batteries in Queensland and New South Wales. AGL also commissioned the first new gas generation in the east-coast electricity market for seven years at Barker Inlet in South Australia.
AGL’s half-year accounts also showed a further gain in the number of energy customer accounts, increasing by 36,000 to more than 3.7 million nationally. The company’s acquisition of Southern Phone – its foray into the telecommunications sector so it can bundle power, internet and phone – added another 160,000 broadband and mobile services.
AGL’s Unit 2 at the brown coal-fired Loy Yang A in the Latrobe Valley was forced out of service in May due to an electrical short and was not brought back online until December, contributing to a particularly tight power supply that has afflicted the east-cost electricity grid during this summer’s heatwaves.
Despite this, Mr Redman said, AGL’s generation output was up 3 per cent of the half, “reflecting our efforts over the past 12 months to invest in plant availability and coal supply”.
The company’s statutory profit for the period rose 11 per cent to $323 million, which included movements in the value of of derivative contracts.
AGL declared an interim dividend of 47¢ per share, down from 55¢ a share for the first half of the 2018-19 financial year.
Analysts said the key takeaway was AGL’s upgrade to its full-year profit guidance which would be in the “upper half” of the range of $80 million to $860 million.
James Nevin, of the Royal Bank of Canada, said the profit guidance had been bolstered by “volatility events” caused by the NSW bushfires which have affected the power grid after knocking out key transmission lines.
However, he noted that headwinds on wholesale prices were likely to persist and “weigh on future earnings” and risks surrounding the company’s emissions-intensive portfolio of coal-fired power stations remained.
“This was a good first half result for AGL,” he said, “but we remain cautious on the longer term view due to falling wholesale prices and risks around its carbon intensive generation portfolio.”