Source: Reuters
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  • Electricity and gas provider AGL Energy (AGL) flags a decrease in half-yearly earnings and a 41 per cent fall in underlying profit after tax for the first half of the 2022 financial year
  • The company says underlying profits fell to $194 million over the six months to the end of December 2021 compared to the $317 million posted during the same time the year before
  • AGL declares a 16-cent dividend for the half-year, unfranked — less than half of the 41-cent interim dividend AGL paid out in FY21
  • Still, Managing Director and CEO Graeme Hunt says AGL’s first-half results reflect a “solid” performance by the business during another period of disruption from the pandemic
  • Shares in AGL Energy are up 0.86 per cent to $7.60 each at 12:40 pm AEDT

Electricity and gas provider AGL Energy (AGL) has flagged a decrease in half-yearly earnings and a 41 per cent fall in underlying profit after tax for the first half of the 2022 financial year.

The ASX 200-lister today told investors underlying profit after tax fell to $194 million over the six months to the end of December 2021 compared to the $317 million posted during the same time period the year before.

Similarly, AGL’s half-yearly earnings before interest, tax, depreciation and amortisation slipped 21 per cent to $723 million. The company said the difference in earnings was largely driven by $105 million in insurance proceeds recognised during the 2021 financial year that did not recur in FY22.

At a statutory level, which accounts for one-off impacts to a company’s bottom line, AGL improved dramatically over the first half of the financial year compared to the year before, reversing a $2.3 billion statutory loss to a $555 million statutory profit.

Of course, this has more to do with a massive $2.69-million write-down during the 2021 financial year as energy prices tumbled.

In any case, AGL has declared a 16-cent dividend for the half-year, unfranked. This is less than half of the 41-cent interim dividend AGL paid out in FY21.

Still, Managing Director and CEO Graeme Hunt said AGL’s first-half results reflected a “solid” performance by the business against the backdrop of another period of disruption from the COVID-19 pandemic.

“As anticipated, our 1H22 result reflects a reduction in earnings largely driven by the non-recurrence of $105 million in insurance proceeds received in 1H21,” Mr Hunt said.

“After adjusting for the non-recurrence of the insurance proceeds in 1H21, underlying profit after tax was down 23 per cent, reflecting the impact of lower wholesale prices over the past two years as we have progressively re-contracted our hedging positions from previously higher prices.

“With the rise of energy and commodity prices across the globe, AGL Energy is well-positioned to benefit from improving wholesale electricity prices, seen over the past six months, and if it is sustained, we expect to see this reflected in future earnings beyond FY22 as hedging positions roll off.”

He added that the strength of AGL’s coal position and gas supply contracts means it could manage the impact of rising commodity prices on its cost base.

Looking ahead, AGL has narrowed its 2022 financial year earnings guidance to between $1.275 billion and $1.4 billion compared to the previous guidance of between $1.2 billion and $1.4 billion.

Similarly, the company has narrowed its underlying net profit after tax guidance to between $260 million and $340 million compared to the previous guidance of between $220 million and $340 million.

At the same time, AGL said it was on track to deliver a $150 million reduction in operating costs over the 2022 financial year compared to the 2020 financial year.

As for its previously-announced demerger to split the company into a bulk power generator and an energy retailer, AGL said this was still on track to be completed before the end of June this year.

Shares in AGL Energy were up 0.86 per cent to $7.60 each at 12:40 pm AEDT. The company has a $5 billion market cap.

AGL by the numbers
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