AGL unveils $650m buyback
AGL shares slumped to an eight-month low after the power generator flagged a weaker profit performance in the year ahead.
AGL has lifted full-year underlying profit 2.2 per cent to $1.04 billion and unveiled a $650 million share buyback, but also said underlying profit would fall as much as 25 per cent over FY20 to between $780 million and $860 million.
Shares in AGL dropped as much as 8.2 per cent to $18.77 in early trade yesterday, their lowest since November 30, before bouncing back to $19.08 by close.
AGL anticipates a hit of up to $100 million from Decemoutage at its Loy Yang coal-fired power station in Victoria, a $70 million rise in posttax depreciation, and the unspecified impact of power price regulation.
“Despite this lower earnings outlook, AGL’s operating outlook remains strong,” chief executive Brett Redman said.
Mr Redman said AGL, which this year walked away from a potential takeover of broadband provider Vocus Communications, remained committed to “creating new opportunities with increasingly connected customers”.
Royal Bank of Canada analyst James Nevin backed AGL’s decision to keep looking at expanding into data services.
“The push by AGL into broadband now looks inevitable as AGL looks to expand from its core electricity and gas energy offering,” Mr Nevin said.
Underlying profit was in line with AGL’s guidance and narrowly beat analyst consensus of $1.02 billion.