AGL Energy has confirmed its earning guidance for fiscal 2009, forecasting net profit after tax of between $360 million and $390 million.
The energy and gas company’s net profit for the 12 months to June this year was $229 million.
Managing director Michael Fraser also confirmed AGL’s 2009 earnings before interest, tax; depreciation and amortisation (EBITDA) would be between $870 million and $915 million.
The previous year’s EBIT was $703.2 million, with about 43% of that generated by the company’s merchant energy business.
Mr Fraser said further profit guidance would be issued after the sale of AGL’s 3.6% stake in the ExxonMobil-led liquefied natural gas project in Papua New Guinea, expected before December 31.
The sale would impact earnings before interest, tax, depreciation and amortisation (EBITDA) but not NPAT, he said.
Mr Fraser said the first quarter of the 2009 financial year had been solid for the company, with a favourable performance of AGL’s electricity and wholesale gas components.
Winter weather outcomes had been favourable for the company, and customer numbers have been maintained in a highly competitive market, he said.
Mr Fraser said in his presentation that "Underlying FY2009 Net Profit After Tax (NPAT) guidance confirmed at $360m to $390m; FY2009 Earnings Before Interest, Tax, Depreciation & Amortisation (EBITDA) confirmed at $870m to $915m.
"Guidance update to follow PNG sale process; a sale of PNG would impact EBITDA but not NPAT; Solid 1st quarter FY2009: Favourable performance of electricity hedge book & wholesale gas book. Favourable winter weather outcomes. Maintaining customer numbers in highly competitive market. Dividend payout policy of ~60% of underlying NPAT, fully franked maintained."
AGL shares rose 16c to $13.60.
Chairman Mark Johnson told the AGM that the company was not immune from the global financial crisis, but that it was in a "solid shape to take advantage of opportunities that might arise from the uncertain times".
Mr Johnson said the company would next begin refinancing its major debt early next year.
"We expect to complete the refinancing, although there may well be an increase in our borrowing margins," he said.
He said AGL was well placed to ride out the global credit storm, but like Australia generally, it won’t be immune.
"A consequence of the crisis has been an extreme tightening in the capital markets, so that even highly credit worthy companies are finding it hard to raise the money required to purchase or develop new assets.
"Some companies are finding that they have to sell assets, in very distressed markets, to maintain financial liquidity.
"AGL is not immune from these impacts, but it is in solid shape to take advantage of opportunities that might arise from the uncertain times.
"The steps taken over the last year to refinance some of our debt, to activate the dividend reinvestment plan, and to sell non-core assets have added strength to our Balance Sheet.
"Our next major debt refinancing is not due until October next year but we intend to start the process early in 2009. We expect to complete the refinancing – although there may well be an increase in our borrowing margins.
"We have taken a number of steps to strengthen our financial position. During the year, we refinanced approximately $550 million of long-term debt.
"The value of this in providing stability and strength to the company has become more evident in view of the global liquidity crisis that has emerged over recent months.
"We also sold our interests in businesses in Western Australia and Chile, realising more than $600 million in cash. Two weeks ago, we announced the sale of our 50% interest in the Elgas LPG business, realising a further $220 million in cash.
"We are in negotiation for the sale of our interests in oil and gas reserves in Papua New Guinea.
"AGL maintains a comprehensive program to insure against damage to its main operating assets and to provide continuity of earnings in the event of any major business interruption.
"Our insurance program is filled by several different underwriters, all of whom have long-term credit ratings of “A” or better.
"The American Insurance Group – AIG – is one of our insurance underwriters. In the United States, the AIG parent company has experienced extreme financial distress requiring emergency assistance from the Federal Reserve.
"However, AIG’s insurance of AGL’s assets is provided principally through its Australian subsidiary company which is required to operate strictly in accordance with Australian prudential regulations, administered by APRA.
"These regulations require, amongst other things, that an insurance company maintain sufficient assets to meet its insurance liabilities. We are confident that we have an effective insurance program supported by a range of good quality insurers."
