Australian AGL Marks Profits Drop as Coal Power Suffers

Aug 12 (Reuters) – Australia’s largest power producer, AGL Energy Ltd (AGL.AX) warned on Thursday that its profits could fall by nearly 60% in fiscal 2022, despite efforts to cut costs hurt by a wholesale price collapse for power.

Sliding wholesale prices, government pressure to lower retail rates and declining investor interest in coal-fired energy have battered the company’s stock over the past two years. AGL hopes to stop the bleeding by splitting in two, with a shareholder vote expected in June 2022. L3N2OB4CW

AGL reported a 34% drop in underlying profit for the year to June 2021 to A$537 million ($396 million), in line with analyst forecasts, hit by higher gas costs and a decline in wholesale power prices to the United States. lowest point in nine years, with demand hurt by pandemic lockdowns and rooftop solar growth.

“Financial year 2021 was one of the toughest energy markets we’ve seen,” AGL chief executive Graeme Hunt told analysts at an investor briefing.

AGL warned it expects earnings to fall to between A$220 million and A$340 million for the year to June 2022, well below analysts’ forecasts of A$357 million, according to data from Refinitiv.

The outlook is roughly in line with competitor Origin Energy’s forecast for the coming year. read more

The plunge is expected even as AGL aims to cut A$150 million in operating expenses by June.

Shares of AGL, already down 55% last year, fell 5.4% on Thursday, significantly underperforming the broader market (.AXJO).

The company said it is well positioned for continued increases in wholesale power prices, and Macquarie analysts said that with a recent recovery in wholesale prices, the company “would have strong earnings support in FY23.”

“At this point you have to hope so,” Chief Executive Graeme Hunt told Reuters.

Electricity prices have fallen due to an influx of solar and wind, impacting the profit margins of 24/7 coal-fired power stations whether prices are low or high – especially painful for AGL, Australia’s largest owner of coal-fired power stations. .

“AGL’s coal obsession is driving the company into the ground,” said Glenn Walker, senior Greenpeace campaigner.

($1 = 1.3565 Australian dollars)

Additional reporting by Savyata Mishra and Soumyajit Saha in Bengaluru; Editing by Devika Syamnath and Richard Pullin

Our standards: The Thomson Reuters Trust Principles.