'Considerable uncertainty': AGL profit falls, warns of difficult year ahead
Australia's largest power generator, AGL, has revealed a sharp decline in underlying earnings as the effects of COVID-19 pummel wholesale energy prices and reduce gas demand.
AGL on Thursday posted a 22 per cent drop in underlying net profit to $816 million for the financial year, saying its result was hit by a prolonged outage of coal-fired power plants and the recent price volatility engulfing the energy market caused by the pandemic. The company warned investors to expect an even tougher year ahead as the economic shock of the virus continued.
AGL plans to run its Loy Yang A coal-fired power station in Victoria until 2048.Credit:Caria Gottgens
"Financial year 2021 will be a year of considerable uncertainty as we navigate the COVID-19 pandemic and its economic impact," AGL chief executive Brett Redman said.
In early trade, AGL shares are 6.7 per cent lower at $15.85.
Across Australia, power prices have been falling following an influx of cheap renewable energy into the grid and a slump in power demand caused by offices, small businesses and factories temporarily closing down. However, increases in energy usage with more people staying indoors have driven shock rises in residential power bills, adding to the financial stress for households affected by the economic downturn and raising the risk of bad and doubtful debts by customers unable to pay
Mr Redman said the full-year result โ in line with its guidance and slightly above the market expectation โ reflected the "strength, stability and sustainability" of AGL during a period of significant upheaval.
"We have delivered continued strong dividends for shareholders, delivered efficiencies to enable us to continue investing in the evolution of our business and continued to build trust and engagement with our people, customers and communities," he said.
The company declared a final dividend of 51ยข a share.
AGL also said on Thursday it would carry out a special dividend program over the coming two years with an effective payout ratio of 100 per cent of underlying after-tax profit.
AGL operates coal-fired and gas-fired power generators and renewable energy assets around the country, supplying 3.7 million customer accounts.