Defensive Stock AGL Energy Comes Up With A Guidance Update – Things You Need To Know

AGL Energy Limited is well known company in the energy industry and has a decent business growth as well as a sound financial performance. The company has provided good returns to its shareholders in form of dividend. At the time of writing on 19th September 2019 (AEST 2:19 PM), the S&P/ASX 200 Energy Sector is trading at 10,863.0 with a fall of 0.51%.

AGL Energy Limited

AGL Energy Limited (ASX: AGL) is in the operation of energy businesses as well as investments, which include electricity generation, gas storage and  also the sale of electricity and gas to residential, business and wholesale customers. On 19th September 2019, the company conducted its 2019 Annual General Meeting, wherein it confirmed its guidance for financial year 2020.

A look at Guide for FY2020

  • AGL Energy Limited affirmed that, it is expecting earnings in the ambit of $ 780 million – $860 million for the period, which is subject to normal trading conditions.
  • It added that the midpoint of this range reflects a decline in underlying profit after tax against 2019 result.
  • The company further stated that it has made entry in FY2020 with a solid position in order to execute its strategy as well as to make decision related to investment that would generate value in upcoming years.
  • The company has entered the financial year 2020 with robust operating cash performance and financial position.
  • The company is in early-stage transition to a future of cleaner, more distributed energy generation and storage from an energy landscape dominated by base-load thermal power. It added that the transition should deliver more reliable, affordable, and cleaner energy for the country while empowering its customers.
  • The company also announced a schedule in relation to close the Liddell power station. It will be closing its first unit in April 2022. In addition, the pending 3 units will be closed in April 2023, for supporting the system reliability from 2022 to 2023 summer.
  • AGL Energy Limited continues to progress several projects in order to provide further generating capacity to the market.

Resignation of Richard Wrightson

The company through a release dated 20th August 2019 announced that Richard Wrightson has stepped down from the position of Executive General Manager (EGM) of Wholesale Markets. However, Richard Wrightson would continue his role until early 2020 as well as he would be working closely with the CEO and AGL’s Wholesale Markets team in order to ensure a smooth and orderly transition of the role.

Change in Directors’ Interest

The company has recently updated the market with the series of announcements, which are related to the change in interest made by the company’s directors:

  • AGL Energy Limited stated that Jacqueline Cherie Hey has made a change to holdings in the company via purchasing 2,100 ordinary shares at the price of $18.89 per share on 13th August 2019. The total securities held with Jacqueline Cherie Hey following the change stood at 10,328 ordinary shares.
  • Also, Patricia Mckenzie has made a change to holdings in AGL by acquiring 3,900 ordinary shares at the average price of $19.104 per share on 12th August 2019.
  • The company in another release announced that Les Hosking changed his holding by acquiring 3,000 ordinary shares at average price of $19.080523 per share on 12th August 2019. Post-change, the total securities held with Les Hosking stood at 11,701 ordinary shares.
  • Diane Smith-Gander, another director, acquired 2,000 ordinary shares at the consideration of $19.07 per share on 12th August 2019, which led to change in the holding and the total shares held were 7,670 ordinary shares.

A look back at financial year 2019

On 8th August 2019, the company updated the market with operational and financial performance for the financial year 2019, wherein it reported key           highlights, which are as follows:

  • The company reported statutory profit after tax amounting to $905 million, reflecting a fall of 43% against FY18. It represents an adverse movement in the fair value of financial instruments amounting to $139 million. It added that the movement in FY19 mainly reflected higher forward prices for electricity and the way AGL Energy Limited hedges its electricity generation position in order to manage pricing risk via forward contracts.
  • The underlying profit after tax stood at $1,040 million, reflecting a rise of 2%, which excludes movements in the fair value of financial instruments and significant Items, which was primarily driven by the margin growth in Wholesale Markets from higher wholesale electricity prices and lower compliance costs for renewable energy certificates.
  • The net cash from operating activities stood at $1,599 million, reflecting a fall of 25% and return on equity stood at 12.5% with a fall of 0.6% compared to the year-ago period.

Dividend

  • The company has declared an 80% franked final dividend amounting to 64.0 cents per share, which brings the total dividends declared for FY19 to 119.0 cents per share, with a rise of 2 cents per share, which was broadly in accordance with growth in underlying profit after tax. The company will be paying the final dividend on 20th September 2019.
  • The dividend reinvestment plan would be applicable to FY19 final dividend. It would purchase shares on market in order to satisfy the dividend reinvestment plan as well as allot these shares at no discount to the simple average of the daily VWAP at which the company’s shares trade during each of the 10 days from 26 August 2019.

Share buy-back

Along with the release of FY19 results, AGL Energy Limited has announced that it is intending to undertake an on-market buy-back of up to 5 % of its issued share capital over the 12 months from 23 August 2019. At AGL’s closing share price on 7 August 2019, this equates to around $650 million. The company recently announced that it bought back 409,920 shares on 7th August 2019, at a consideration of $7,776,920.26 with respect to its daily share buy-back notice.

When it comes to the price performance of the stock, AGL Energy Limited was last traded at a price of A$19.150 per share with a rise of 1.916% on 19th September 2019. It witnessed a decline of 14.04% in the time frame of six months. On Year to date basis, the stock produced a return of -7.44%.


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