More pain for embattled fossil fuel utility AGL Energy, with the shares falling sharply after another weak financial report to the stockmarket.
Despite a pledge to bring forward the closures of its remaining coal-burning power stations in Victoria and New South Wales, the shares fell 3.4% to $7.27, which was in fact the day’s close and a signal of a lack of real confidence in the stock.
That was after a rise in the wake of the release of the result to a day’s high of $7.82 which was reversed as analysts went through the figures during the day and the shares ended on the weak side of momentum.
AGL said it would remove coal from its electricity generation mix by 2045 at the latest – three years earlier than previously planned.
Under its new timetable, AGL’s Bayswater coal plant in NSW, which had been scheduled to retire in 2036, would now shut in 2033. Its newest coal powered generator, the Loy Yang A generator in Victoria’s Latrobe Valley, would have its closure brought forward from 2048 to 2045.
AGL said the earlier closures would cut its emissions by between 18% cent to 27% a year from 2025 to 2034, and by 55% to 60% a year from 2025 to 2030.
“The readiness of the entire energy system to operate without our critical baseload generation will determine whether the earlier, more ambitious targets in the range can be achieved,” the company said.
But climate activists were not happy, saying the wanted a faster pace of closure from the country’s biggest energy utility.
And they may get if the continuing fall in electricity costs because of the continuing growth of cheaper renewable energy (winds, solar, hydro) across the country drives daytime wholesale power prices to levels where fossil fuels can’t compete and incur losses, as AGL found in 2020-21 with a loss of $2 billion.
On Thursday, AGL said it had returned to profit in the six months to December 31, following 20201’s writedowns and losses on forward supply contracts. The board declared a first-half dividend of 16 cents per share, down 60% from 41¢ a year earlier.
Chief executive Graeme Hunt described the result as “solid” against the backdrop of reduced demand caused by the COVID-19 pandemic, milder weather and growing uptake of rooftop solar panels.
While revenue was up 6% to $5.713 billion from a year earlier, underlying earnings before interest tax depreciation and amortisation dropped 21% to $723 million.
Statutory net profit after tax swung from a loss (with the big write offs a year earlier) to a $555 million profit.
That didn’t impress nor did the still slow progress on the split in the company into its old, bad fossil fuel assets such as the sooner to close power stations, and the new assets in the same of renewables and distribution.
Mr Hunt said in the release that “We are well-progressed with our proposed demerger with completion on track for 30 June 2022.”
“The proposed demerger will create a strong future for both parts of our business and through this enable a responsible and orderly transition towards a decarbonised energy future.”
At one stage in 2021, it was expected that the demerger was due to happen towards the end of last year.
