AGL Energy Limited (ASX: AGL) is Australia’s one of the biggest energy provider with more than 180 years of experience and approximately 3.6 million customer accounts. It is one of the largest ASX listed investors in renewable energies, and endeavours to become sustainable, secure and affordable clean energy provider by minimizing carbon footprints through exiting coal-fired generation plants by 2050. The diverse power portfolio includes peaking, base, and intermediate generation plants as the traditional thermal generation units, natural gas, and renewable energy sources from solar, wind, biomass, landfill gas, and hydro-energy units.
Today, AGL has released its H1 FY19 results. It reported total injury frequency rate at 3.1 per million hours worked. It reduced its electricity prices, offered discounts as loyalty bonus reward, and conducted debt relief programs for the vulnerable. Its new energy supply projects which are under construction are worth A$1.9 bn and may further infuse A$1.5 bn on subject to feasibility. It has secured pumped hydro options, and its new residential battery offering would be ready by July 2019. To enhance its customer experiences, it is upgrading its ERP solution which is nearing its completion, and its benefit is expected to realize from FY20 onwards. It is continuously identifying opportunities for growth to boost its shareholder sentiments.
Its forward electricity prices have rallied due to tight supply/demand conditions, higher thermal fuel input costs, lower non-AGL hydro generation due to lower storage cost, and delay in renewable projects.
It reported 53% decline in its statutory profit after tax to A$290 mn in H1 FY2019 from A$616 mn in H1 FY2018, attributed to rising forward electricity prices whereas higher wholesale electricity prices helped its underlying EBITDA to increase by 7% to A$1,157 mn in H1 FY2019 from A$1,084 in H1 FY2018. It reported an increase in return on equity to 13.1% in H1 FY2019 from 11.7% in H2 FY2018.
A$406 mn were spent on ensuring availability of thermal plants in H1 FY19 by the company, where A$217 mn were spent in thermal sustaining to ensure summer reliability, A$13 mn were spent in renewables, A$78 mn were spent on systems development and A$16 mn were spent in other growths. It has forecasted A$340 mn and A$315 mn of investment in thermal sustaining for the FY2020 and FY2021 respectively. It has maintained its guidance range for underlying Profit after tax to be A$970 mn to A$1,070 mn.
Its subordinated notes valuing more than A$600 mn are available for redemption in June 2019 using cash reserves and/or bank debt subject to market conditions and funding requirements. It has more than A$1.26 bn of cash and undrawn debt facilities. Its gearing, i.e., net debt to net debt plus equity stands at 23.5% with interest cover at 8.8x. Moody has maintained its rating at Baa2 with a stable outlook.
On stock information, AGL energy last traded at A$21.10 (down 4.783% as on February 7, 2019) with the market capitalization of A$14.53 bn. Its P/E ratio is 9.16x, and its 52 weeks high has been noted at A$23.465 and low at A$17.440. Its absolute return for 3 months, 1 year and 5 years has been 21.76%, -2.08% and 55.75% respectively.
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