Release Date: February 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- AGL Energy Ltd (AGLNF, Financial) reported strong earnings results for the half-year, in line with expectations.
- The company has made significant progress in its retail transformation program, delivering benefits and simplifying product offerings.
- AGL Energy Ltd (AGLNF) has increased its flexible fleet capacity to 7.6 gigawatts, with plans for further expansion in grid-scale battery projects.
- The company has maintained a strong cash conversion rate and declared a fully franked interim dividend of $0.23 per share.
- AGL Energy Ltd (AGLNF) continues to capture a disproportionate share of the rapidly growing EV market, with innovative plans and partnerships.
Negative Points
- Underlying profit after tax decreased by 7% compared to the prior half, mainly due to higher depreciation and amortization.
- The thermal fleet availability factor was lower due to planned outages, impacting overall fleet performance.
- Operating free cash flow was lower, driven by increased income tax paid and sustaining capital expenditures.
- The company faces ongoing customer competition and market activity, leading to reduced consumer margins.
- AGL Energy Ltd (AGLNF) anticipates increased depreciation, amortization, and finance costs in the second half of the fiscal year.
Q & A Highlights
Q: Can you provide an update on the returns from operational batteries and how these might evolve in the future?
A: We are seeing strong performance, particularly from the Torrens Island battery, with the Broken Hill battery now operational and the Liddell battery about 30% complete. We believe there are great returns in these batteries, currently performing higher than the expected range of 7 to 11%.
Q: With the acceleration of CapEx on batteries, what is the expected cost and how do you plan to fund this?
A: We plan to take final investment decisions on these batteries over the next 12 to 18 months. Costs have decreased by 30 to 40% from previous highs, and we expect further reductions. Our net debt position is manageable, and we have ample headroom to fund these projects through a combination of cash flows and debt.
Q: What are your expectations from the ongoing review of the National Electricity Market (NEM)?
A: We aim to ensure that all necessary services in the market are compensated as the transition to renewables continues. The review is an opportunity to reset and prepare for future demands, including the integration of consumer energy resources.
Q: Can you provide insights into the trends in your Net Promoter Score (NPS) and customer satisfaction?
A: While strategic NPS has seen some pressure, our transactional NPS scores and customer satisfaction are strong. Operational metrics like complaints and digital engagement are improving, reflecting a positive customer experience.
Q: How are you managing the risk of potential margin compression as the QGC gas contract rolls off?
A: We are confident in maintaining appropriate margins despite the contract roll-off. Our contracting and origination capabilities will ensure sufficient gas supply and returns, supported by ongoing discussions with local and LNG suppliers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
