AGL Energy shares climb on profit boost, $250m acquisition
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More news: Shares in AGL Energy climbed in morning trade after Australia's top electricity generator boosted its full-year profit and announced the acquisition of battery developer Firm Power and solar project firm Terrain Solar for a combined $250 million.
AGL shares were up 5% to $11.36 by 11am AEST.
RBC Capital Markets analyst Gordon Ramsay noted AGL's result beat consensus estimates, underpinned by higher realised electricity prices and margins, and a nine-month contribution from the Torrens Island Battery.
AGL's FY25 guidance, which represents a decrease in earnings compared to FY24, was "slightly better" than consensus expectations, according to Ramsay, with analysts already accounting for a lower outlook due to falling wholesale electricity prices, consumer margin compression, and flat operating costs.
AGL Energy boosts underlying profit by 190%, announces acquisition
The news: AGL Energy will acquire an 8.1 GW of renewable energy development pipeline with the acquisition of battery developer Firm Power and solar project firm Terrain Solar for a combined $250 million.
The numbers: The company announced the acquisition on the day its full-year underlying profit swelled to $812 million, 190% higher than the previous period.
AGL guided an underlying net profit for FY25 to be between $530 million and $730 million.
The company also declared a final unfranked dividend of 35 cents, bringing the total dividend for the financial year to 61 cents. This was an increase to the previous year's unfranked dividend of 23 cents and total dividend of 31 cents for FY23.
Generation availability was higher due to the commissioning of the Torrens Battery in South Australia, which operated for nine months of the year, and fewer outages at coal-fired power stations, including Loy Yang A and Bayswater, compared to 2023.
The Equivalent Availability Factor (EAF) was up 9% on the prior corresponding period to 85.8%.
Excluding today's acquisition, AGL has total flexible capacity of 7.4 GW and a 6.2 GW development pipeline.
The context: CEO Damian Nicks attributed the stronger result to consistently higher wholesale electricity prices throughout the 2023-24 financial year, as well as strong revenue from retail customer service areas including energy, telecommunications and Netflix subscriptions.
The company attributed the expected decrease in earnings for FY25 to lower wholesale electricity prices, consumer margin compression, broadly flat operating costs, and increased depreciation and amortisation due to continued investment in the availability and flexibility of its assets.
AGL also announced that its chair Patricia McKenzie would retire from the board after two years in the role, and five years as a non-executive director, at its FY25 half year results in February. It has appointed Miles George as chair-elect.
George has over 30 years of experience in the energy and infrastructure sector and has been a non-executive director at AGL since 2022.
The source: ASX announcement
