Reporting Season

AGL first-half profits slide, dividend slashed but still ahead of forecasts

Thu 10 Feb 22, 12:22pm (AEST)
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Key Points

  • AGL profits slide -41% but beat Bloomberg and Morgans estimates
  • Coal plant closures were brought ahead along with updated emissions targets
  • AGL expects a weaker second-half due to increased costs to cover peak demand periods

Given that the market expected AGL Energy’s (ASX: AGL) interim result to disappoint, after what has been a tough first half, revelations today that profits had fallen -41% to $194m came as no surprise. 

However, the market saw sufficient good news within today's result - including a 5.5% rise in first-half FY22 revenues to $5.7bn - to nudge the share price around 1% higher in early morning trade.

In defence of the profit decline, the reduction was largely driven by a one-off $105m in insurance proceeds. After adjusting for the non-recurrence, first-half profits were down -23%. 

AGL declared a 16 cents per share interim dividend, down -60% compared to last year. The dividend represents a yield of 2.1% based on today’s open price of $7.56.

AGL shares will go ex-dividend on Wednesday, 23 February. 

Still better than forecasts 

Morgans was expecting a “significantly weaker first-half” performance, forecasting earnings of $97m. 

Bloomberg estimates were far more pessimistic, expecting a -$70.7m loss and a 12.6 cent dividend. 

Today's price action reflect the better-than-expected result, with AGL shares up 2.7% at 11:00 am AEDT. 

Guidance range narrowed 

AGL expects FY22 net profits to range between $260m and $340m, compared to its previous guidance between $220m and $340m.

Earnings are expected to be lower in the second half due to higher costs to cover peak electricity demand.

Taking a longer-term view, Managing Director and CEO Graeme Hunt said:

“With the rise of energy and commodity prices across the globe, AGL Energy is well positioned to benefit from improving wholesale electricity prices, seen over the past six months, and if it is sustained, we expect to see this reflected in future earnings beyond FY22 as hedging positions roll off.

Written By

Kerry Sun

Finance Writer & Social Media

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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