What Dented AGL Energy's First-Half Performance?

Summary

  • AGL Energy (ASX:AGL) has unveiled its first half report with significant dip in EBITDA and underlying NPAT.
  • The net cash from operations declined 46% against pcp while the electricity generation volume went down by 4.5%.  
  • The Company is looking for improved guidance for FY2021.

Australia’s leading energy company AGL Energy Ltd (ASX:AGL) has reported a significant dip in EBITDA and underlying NPAT for HY2021 (ended 31 December 2020).

The results for the period were primarily impacted by a sharp decline in the wholesale price of electricity, lower gas margins, higher operating cost due to COVID impacts, and a large depreciation expense in relation to the recent investment made by the Company.

To Know More, Do Read: NEM Prices Average At Multi-year Low As Demand Dazes And Gas Price Declines in Q12020

1H Highlights

The   underlying EBITDA for the period declined by 13% year-on-year to A$926 million.

  • The Company reported a statutory loss of A$2,287 million. Underlying profit after tax was also down by 27% accumulating A$317 million, which includes A$74 million as an insurance receipt of Loy Yang Unit 2 outage.
  • The statutory loss includes A$2,686 million towards onerous contracts and asset impairments and A$93 million towards positive movement in financial instruments' fair value.
  • Total electricity generation volume accounted for 20,816GWh, which was down by 4.5% due to less demand, thanks to a large penetration of rooftop panels across the nation, milder weather conditions, and unplanned outages.

(Source: AGL ASX Update, dated 11 February 2021)

AGL’s net cash from operations stood at A$614 million, down by 46% compared to the previous half-yearly results. The significant dip was noted because of the earning reductions and negative working capital movements related to wholesale electricity market positions.

  • On the flip side, the company reported a significant increase of 246,000 in total service to customers resulting in 4.2 million. The results are driven by Click Energy's acquisition, launch of broadband technology and organic growth in energy. The company spent A$600 million towards debt repayment of the bank.
  • Apart from this, AGL declared a special dividend of $10 cents and an interim ordinary dividend of $31 cents per share.
  • The Company is also progressing towards the development of 850MW grid-scale batteries. Additionally, AGL has a capacity of 100MW and 50,000 customers in orchestration programs.

Outlook

The Company expects underlying profit after tax for FY21 to lie in the range of A$500 million and A$580 million looking deteriorated certificate prices of renewable energy and wholesale electricity.

Also Read: Wholesale Gas Prices Under Storm- Lens over Demand and Supply  

  • AGL also anticipates a flat operating cost curve and an underlying profit after tax between A$500 million and A$580 million in FY2021.  A A$150 million reduction is expected in operating cost in FY22.
  • EBITDA is also targeted between A$1,585 million and A$1,845 million.

Management Views

(Source: AGL ASX Update, dated 11 February 2021)

Stock Price Movement

AGL last traded at A$11.055 (as on 12 February 2021 AEDT 12:55 PM), down by 2.169% against its previous close on the ASX. 


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