AGL slumped to a first-half loss of $1.1 billion and halved its interim dividend as a result.
The energy utility will pay an interim dividend of 8 cents per share, down from 16 cents per year ago after the underlying profit of $87 million for the December half fell well short of a market consensus estimate of $160 million.
The $1.1 billion loss was down from a profit a year earlier of $555 million, so the turnaround was dramatic.
The miss and lower dividend saw the market give the result a clear thumbs down and AGL shares fell more than 10% to $7.12. That’s despite the company predicting a better performance in the current half.
The six months to December were pretty dramatic – a tussle for control between old management and board members and new shareholders saw the latter triumph, led by billionaire climate activist Mike Cannon-Brookes became the company’s biggest shareholder. He overhauled its board and put it on a more aggressive pathway to decarbonisation.
But as dramatic as those changes were, AGL was hit by more mundane events – the price of its energy inputs and continuing problems with one of its main coal-fired generators in Victoria.
The prolonged unit outage at its ageing Loy Yang A coal-fired power station in Victoria’s Latrobe Valley last year slashed output at a time of high wholesale electricity prices, while the previously flagged write-down reflected the decision to accelerate its exit from coal.
AGL’s newly appointed CEO Damien Nicks said the impact of plant outages during “challenging energy market conditions” in July were reflected in the company’s financial results.
“Importantly, as units have returned to service, we’ve seen a significant improvement in portfolio performance at the end of the first half,” Nicks said. “We expect to have higher earnings in the second half of financial year 2023.”
AGL’s fleet of coal power stations is the biggest source of Australia’s greenhouse gas emissions, accounting for about 8% of the national carbon footprint.
Mr Cannon-Brookes led a campaign in early 2022 that ended AGL’s long-held ambitions to demerge its coal-fired power stations into a separate entity, forced the resignations of its chairman and chief executive, and eventually forced the board to dramatically speed up its decarbonisation agenda.
In September, the board resolved to close AGL’s last-remaining coal plant, Loy Yang A in Victoria’s Latrobe Valley, up to 10 years earlier in 2035, and invest $20 billion on renewable energy and back-up “firming” assets by 2036.
Mr Nicks said the Albanese government’s emergency caps on the cost of coal and gas, designed to drive down the cost of running power stations and restrain soaring energy bills for homes and businesses, had reduced future wholesale electricity prices.
But he said wholesale prices still remained “elevated” compared to recent years, which in turn would help drive AGL’s earnings growth in the next financial year.
He said AGL supported the government’s efforts to reduce the pain of soaring energy prices through customer bill rebates, but was uncertain about the introduction of the 12-month fossil fuel price caps, and the attempt to influence wholesale gas contracts beyond the end of the year through a mandatory code of conduct for the gas industry.
