AGL predicts 'flexible' batteries will shore up future earnings
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More news: AGL is cautiously expecting earnings to bounce back in FY26 from its fledgling battery storage assets, improved customer margins and people's ability to pay their bills, despite posting a full-year $98 million FY25 statutory loss.
"The 9% fall in underlying EBITDA was chiefly due to lower coal generation volumes from the five-month long outage of the Bayswater power station and unplanned maintenance at Loy Yang A, lower wholesale power prices and squeezed consumer margins," CEO Damien Nickless told analysts at a briefing following the full-year result.
He said revenue from "flexible generation" would be higher with the new Liddell battery in New South Wales predicted to come online in 2026, and as the Tomago Battery is financed and built over the coming two years.
"What we've released today is we saw really strong performance around flexible assets. That's the key point here. It offsets some of the major outages we saw in the first half in two versus one. But in the second half we did have some multi outages. Those flexible assets absolutely formed well above where we where we anticipated them," Nickless said.
During the call, company management repeatedly said the flexible portfolio would be a key contributor to generation volumes, revenues and earnings in future financial years.
Batteries, pumped hydro and ancillary services that coal plants comprise AGL's flexible portfolio, because they can be switched on when the company's coal, wind and solar power plants are not available.
Asked about whether batteries were being operated at a profit, Nickless said the Torrens Island Battery and the Broken Hill batteries were generating returns toward the higher end of the expected 7%-11% range.
Nickless said earnings would face less pressure from consumer margins, suggesting that some of the cost of maintaining coal plants and spending on new batteries might be passed onto consumers over the coming financial year.
"We expect an improvement in consumer market results next year, and we expect higher generation levels going forward [despite a 6% fall in fleet availability in the financial year just past]."
AGL shares tumble as FY25 result misses estimates
More news: AGL Energy was the worst performing company on the ASX in early trade after the energy group swung to a full-year loss and cut its final dividend.
AGL shares were down 12.6% to $8.93 at 10:50am AEST, extending losses to around 21% since the turn of the year.
UBS analyst Tom Allen called it a "softer than expected result" with AGL's FY26 guidance reflecting 2% lower EBITDA than consensus estimates at the midpoint, and net profit after tax guided 11% lower than average forecasts.
Allen said the guidance implied higher-than-expected depreciation and amortisation, and increased interest costs on rising net debt, which has climbed $1.1 billion year on year to $2.9 billion.
He said AGL's warning that gas margin compression and higher operating costs in FY26 "should see the stock trade weaker today".
AGL Energy swings to full-year loss, slashes dividend
The news: Integrated energy company AGL has swung to a statutory loss of $98 million for the 2025 financial year, down from a net profit of $711 million a year earlier.
The numbers: Underlying net profit after tax, which excludes significant items of $596 million during the period, was down 21% year on year to $640 million.
This was in line with the company's guidance range of $530 million and $730 million, which was updated in February.
Significant items included a $398 million increase in onerous contracts and retail transformation costs of $87 million. There was also a negative movement in the fair value of financial instruments, amounting to $142 million.
Underlying EBITDA fell 9% year on year to $2.01 billion, but came within the upper range of its guided range of $1.9 billion to $2.1 billion.
AGL declared a final dividend of 25 cents per share, down from 35 cents a year ago.
The company has guided FY26 underlying EBITDA of between $1.92 billion and $2.2 billion, and underlying net profit after tax between $500 million and $700 million.
The context: Managing director and CEO Damien Nicks said the company expected a decrease in earnings compared to FY24, due to lower wholesale electricity prices resetting through contract positions, and customer margin compression following a period of heightened market activity.
The decline was also a result of AGL's decision not to fully pass through year-on-year cost increases to customers to help with customer affordability, he said.
The company expects an increase in underlying EBITDA in FY26 compared to FY25 due to an improvement in plant availability and fleet flexibility, including the start of operations of the Liddell Battery in New South Wales.
The sources: ASX, UBS research
