AGL FY18 Results and FY19 Earnings Guidance
Summary of results for financial year ended 30 June 2018
- Statutory Profit after tax: $1,587 million, up 194 percent
- Statutory earnings per share: 242.0 cents, up 201 percent
- Underlying Profit after tax: $1,023 million, up 28 percent
- Underlying earnings per share: 156.0 cents, up 30 percent
- Net cash provided by operating activities: $2,134 million, up 140 percent
- Total dividends: 117.0 cents per share (80 percent franked), up 29 percent
- Return on equity: 13.0 percent, up 2.8 percentage points
AGL Managing Director & CEO, Andy Vesey, said: “AGL’s financial result for FY18 reflects the benefits of our multibillion-dollar investments in our electricity generation portfolio over recent years, which alongside disciplined execution of our strategic plans, has resulted in strong returns for shareholders during the recent period of higher wholesale electricity prices. This increase in prices in the broader electricity market has mostly been a result of the abrupt closure of non-AGL power stations such as Hazelwood in 2017 and Northern in 2016 and higher input costs for coal and gas.
“In this environment, we recognise that many Australian households are facing cost-of-living pressures because of the higher energy bills that have resulted from higher market prices. For that reason, we are investing to create new supply in the market. AGL and our partners are currently developing 1,215 megawatts of new generation capacity, representing investment of more than $2 billion, more than any other company in Australia. This includes Australia’s largest wind farm at Coopers Gap in Queensland, a new dual-fuel power station at Barker Inlet in South Australia and, in New South Wales, an expansion of our Bayswater coal-fired power station, development of a new gas-fired power station at Newcastle, and the Silverton Wind Farm. In addition, we have put in place key infrastructure agreements for our project to bring new competitive gas supply to south-east Australia through the import of liquified natural gas at Crib Point, on which we will make a final investment decision in FY19.
“We strongly support the adoption of the National Energy Guarantee. If the National Energy Guarantee is settled, we anticipate being able to make further progress on new electricity generation projects – including potentially additional gas-fired generation and pumped hydro generation, as well as battery storage projects in the longer term. While wholesale electricity prices have already begun to fall over the past 12 months, policy certainty is key to encouraging the additional generation supply that will place further downward pressure on prices and benefit consumers over time.
“In addition, we have announced today a package of initiatives to build on our pre-existing programs to help vulnerable and standing offer customers, including $50 million of hardship debt relief and the extension to all states of automatic loyalty discounts to electricity customers on standing offer who have been with AGL for at least two years. In addition, we have launched a guaranteed annual plan review for all standing offer customers and a new Small Business Assist service. These initiatives complement our existing Fairer Way affordability initiative and Staying Connected hardship support program.”
Statutory and Underlying Profit
AGL’s Statutory Profit after tax of $1,587 million for FY18, compared with $539 million in the previous year, included a positive movement in the fair value of financial instruments, following a negative fair value movement in the prior year.
Underlying Profit after tax, which excludes movements in the fair value of financial instruments, was $1,023 million, up 28 percent and in the upper half of AGL’s FY18 guidance range of $940 million to $1,040 million. The increase in Underlying Profit reflected strong earnings growth in AGL’s Wholesale Markets business unit, which more than offset a decline in the Customer Markets business unit’s earnings and increased depreciation costs across AGL.
AGL has declared a final dividend for FY18 of 63.0 cents per share, 80 percent franked. Total dividends declared for FY18 are 117.0 cents per share, up 29 percent, broadly in line with growth in Underlying Profit after tax. The FY18 final dividend will be payable on 21 September 2018 with a record date of 23 August 2018. Shares will trade ex-dividend on 22 August 2018. The unfranked component of the dividend will be paid from conduit foreign income, meaning it will not be subject to dividend withholding tax for non-Australian shareholders.
AGL's dividend reinvestment plan (DRP) will operate with respect to the FY18 final dividend. AGL will buy shares on market to satisfy the DRP and will allot these shares at no discount to the arithmetic average of the daily volume-weighted average price at which AGL's shares trade during each of the 10 days commencing 27 August 2018. The last date at which shareholders can elect to participate in the DRP with respect to the FY18 final dividend is 24 August 2018.
FY19 guidance and business optimisation program
AGL expects Underlying Profit after tax in the financial year ended 30 June 2019 to be between $970 million and $1,070 million. This guidance includes the benefit of a $120 million reduction in operating costs, which will mitigate the impact of increased competitive intensity in Customer Markets. This is part of a broader business optimisation program targeting a return to FY17 operating cost levels by FY21. All guidance is subject to normal trading conditions.
AGL has today released its FY18 Sustainability Report. The report and sustainability performance data can be accessed and downloaded from AGL’s website at agl.com.au/2018sustainabilityreport. AGL has also released a report – Powering a Climate-Resilient Economy – covering climate-related financial risk and opportunities to its business, adopting the framework recommended by the Task Force on Climate-Related Financial Disclosures. This report can be accessed at agl.com.au/about-agl/investors/special-reports.
Webcast and conference call
AGL will hold a webcast and conference call to discuss the FY18 result and FY19 outlook at 10.45 am, Sydney time, today. A copy of the webcast presentation will be lodged with the ASX and made available on AGL’s website. The webcast will be accessible via agl.com.au/FY18results or using the following dial-in details:
Dial-in details: Toll-free Australia: 1800 093 431; International: +61 2 8047 9393
Participant pin code: 16 044 873#
A transcript and archive of the webcast will be available on AGL’s website in due course.
AGL is committed to helping shape a sustainable energy future for Australia. We operate the country’s largest electricity generation portfolio, we’re its largest ASX-listed investor in renewable energy, and we have 3.6 million customer accounts. Proudly Australian, with more than 180 years of experience, we have a responsibility to provide sustainable, secure and affordable energy for our customers. Our aim is to prosper in a carbon-constrained world and build customer advocacy as our industry transforms. That’s why we have committed to exiting our coal-fired generation by 2050 and why we will continue to develop innovative solutions for our customers.