Finance Finance News AGL profit falls on unfavourable conditions

AGL profit falls on unfavourable conditions

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Electricity retailer AGL Energy’s net profit for the first half of the fiscal year has fallen 27.1 per cent to $261 million.

Australia’s second largest energy retailer blamed the fall on the nation just experiencing its warmest winter on record, businesses and households becoming more energy efficient and fierce competition that has led to discounting in utilities.

AGL’s underlying profit – excluding one-off items – was down 11.4 per cent to $242 million for the six months to December 31.

The higher net profit than underlying profit related to gains on the value of energy derivatives, with the company preferring underlying profit as a more accurate measure of financial performance.

The company’s interim dividend of 30 cents per share, fully franked, was unchanged.

Chief executive Michael Fraser said he thought it was a credible result given the difficult market conditions the company was facing.

“Our core operations are performing very well,” he told AAP.

“It was the warmest winter on record, there was a flow through from fierce competition with heavy discounting, households and businesses are more energy efficient.

“We added to our customer base with the successful acquisition of APG.”

Mr Fraser said he expected an improved financial performance in the second half of the financial year, including a full six month contribution from the acquired APG.

Beyond that, he saw more improvements for AGL including competition and discount prices abating from next year and with a big step up in gas sales in Queensland where it has secured extra supplies.

AGL reaffirmed guidance for full year underlying profit this year of $560 million to $610 million, which compares to $598 million last year.

AGL will find out next week if its $1.5 billion proposal to buy NSW electricity generator Macquarie Generation has been approved by the competition regulator.

Mr Fraser said he was confident AGL had addressed the Australian Competition and Consumer Commission’s concerns, despite consumer law lobby group complaints that it will mean higher prices for the public.

Mr Fraser said he expected an improved financial performance in the second half of the financial year, including a full six month contribution from the acquired APG.

Beyond that, he saw more improvements for AGL including competition and discount prices abating from next year and with a big step up in gas sales in Queensland where it has secured extra supplies.

AGL reaffirmed guidance for full year underlying profit this year of $560 million to $610 million, which compares to $598 million last year.

AGL will find out next week if its $1.5 billion proposal to buy NSW electricity generator Macquarie Generation has been approved by the competition regulator.

Mr Fraser said he was confident AGL had addressed the Australian Competition and Consumer Commission’s concerns, despite consumer law lobby group complaints that it will mean higher prices for the public.