Energy utility, AGL has lifted dividend 6% to a full year payout of 68 cents a share (from 64 cents in 2014-15) with a final of 36 cents after yesterday reporting a higher underlying net profit for the year to June.
AGL said it earned $701 million for the year to June 11% higher than the $630 million a year earlier. But it was a touch under market forecasts for as much as $720 million.
But there was a hint of a soft start to 2016-17, thanks to the mild, wet weather in much of the country. And while the company won’t provide earnings guidance for 2016-17 until the annual meeting late next month (as usual), it did outline a number of potential headwinds, especially for the first half to the end of December.
AGL warned that unseasonably mild weather in July has meant a “challenging start” to the new financial year, pointing to a $100 million reduction in profit margins in its gas portfolio.
As well it also pointed out that “The benefit of stronger wholesale electricity prices will moderate over the medium term, reflecting the prevailing competitive environment, the timing of price changes and AGL’s hedging profile and ongoing enterprise bargaining agreements at AGL’s Loy Yang and Macquarie power stations.”
Still, AGL said it “continues to expect to deliver earnings growth in FY17”, but noted those factors remain to be overcome. But we won’t know until September 28.
The decision to abandon gas projects in Camden, south of Sydney, and at Gloucester, north of Newcastle, along with other gas write-downs, saw AGL book impairment charges of $795 million which was boosted to total write-offs of $868 million with other charges, including restructuring charges.
AGL’s revenue climbed 4.4% to $11.15 billion, while those pre-tax natural gas impairment and exit charges of $795m led to a statutory loss of $408m, well down on 2014-15’s $218m profit.
AGL said its dividend reinvestment plan (DRP) will operate with respect to the 2016 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 August 29, 2016. The last date at which shareholders can elect to participate in the DRP with respect to the 2016 final dividend is August 26, 2016.
AGL shares slipped 3.8% to $19.58.
