AGL reveals rosy outlook
Australia's largest electricity and gas supplier has announced it expects a significant increase in core net profit for the next financial year.
AGL Energy this week said it anticipates that its profit will at least double, boosted by higher wholesale power prices and improved performance at its power plants.
AGL's shares soared in early trading following the release of its earnings guidance for 2023-24, which indicates an underlying net profit ranging between $580 million and $780 million, up from the upgraded guidance of $255 million to $285 million for the current year.
CEO Damien Nicks says the company is focused on striking a balance between investing in transition opportunities, maintaining a healthy balance sheet, and providing appropriate shareholder returns.
AGL aims to deploy $8 billion to $10 billion on transition projects over the next 12 years, with a significant portion to be funded through joint ventures, alliances, and power purchase agreements.
Despite the positive outlook, AGL downgraded its dividend payout policy to support its investment-grade credit rating and fund multi-billion-dollar investments in low-carbon energy.
The company's rivals, including Origin Energy and Canadian giant Brookfield, are also planning substantial investments in the low-carbon energy sector.
AGL's upwardly revised profit guidance is welcomed by analysts, who anticipate benefits from stronger wholesale power prices and increased retail electricity prices.
The company's performance for the current financial year has shown improvement, with higher generation levels and customer margins offsetting increased costs.
The company's dividend policy will also undergo changes, with a lower payout ratio of between 50 per cent and 75 per cent of underlying profit after tax, starting from the interim payout in 2024-25.