Energy retailer AGL’s profits increased by 194 per cent, in the last financial year, to $1.6 billion.
AGL managing director and CEO Andy Vesey said AGL’s results for the 2018 financial year reflect the benefits of the company’s multibillion-dollar investments in an electricity generation portfolio over recent years.
“Alongside disciplined execution of our strategic plans, [this] has resulted in strong returns for shareholders during the recent period of higher wholesale electricity prices,” said Vesey.
“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,” he said.
“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 the reason, we are investing to create new supply in the market,” said Vesey.
AGL and its partners are developing 1,215 megawatts of new generation capacity, representing investment of more than $2 billion.
This includes Australia’s largest wind farm at Coopers Gap in Queensland, a new dual-fuel power station at Barker Inlet in SA, and an expansion of the Bayswater coal-fired power station in NSW.
“We strongly support the adoption of the National Energy Guarantee. 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,” said Vesey.
AGL’s statutory profit after tax of $1,587m for FY18, compared with $539m in the previous year, included 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 $1,023m – up 28 per cent in the upper half of AGL’s FY18 guidance range of $940m to $1,040m.
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 earnings and increased depreciation costs across AGL.