Shock hit for AGL shares
Energy giant’s Loy Yang plans weigh on stocks
SHARES in AGL have slumped after the energy giant announced a $25 million upgrade to Victoria’s Loy Yang coal-fired power station and renewed calls for more certainty from Canberra on future energy policy.
AGL, which reported a 10 per cent lift in underlying profit to $537 million for the six months to December 31, said yesterday the upgrade would boost the output and efficiency of Loy Yang (pictured) without raising carbon emissions.
But at the same time, the power generator and provider has secured an option over a 250 megawatt pumped hydro energy storage project at Bells Mountain near Muswellbrook in NSW.
AGL shares were trading 3.34 per cent lower at $21.42 in midday trade but closed off their lows with a fall of 1.06 per cent. Managing director and chief executive Brett Redman said the scrapped National Energy Guarantee and fractured debate around proposed federal legislation had delayed progress on the new 252 megawatt gas-fired power station at Newcastle.
But he also moved to assure investors that AGL had a good working relationship with both the Government and the Opposition.
“Interestingly enough we had a senior member of the shadow cabinet visiting us yesterday,” Mr Redman said yesterday. “I would describe (the relationship with Labor) as good... I would say the same as Government, too. I think there is a good two-way flow of information and an ability to work with both sides of the House.”
AGL’s first-half revenue fell 1.3 per cent to $6.43 billion on falling sales across the customer and wholesale markets, as well as non-recurrence of revenue from its recently divested solar installation unit.
The company also noted consumers had been switching to lower-priced products. Net profit after tax dropped 53 per cent to $290 million due to a reduction in value of the company’s financial assets.
But underlying net profit rose 10.3 per cent to $537 million, and was tracking at the midpoint of its guidance range.
The loss on fair value of financial instruments of $251 million – compared with a $127 million gain in the prior corresponding period – was a reflection of higher future electricity prices and lower oil and coal prices.
The company will pay an interim dividend of 55 cents, 80 per cent franked, up from 44 cents the same time last year. AGL shares were valued at $22.16 before the start of trade yesterday.