The AGL Energy Ltd (ASX: AGL) share price is under scrutiny today after reporting a massive loss in the first half of FY23.
AGL HY23 result
Here are some of the highlights from the first six months of the 2023 financial year:
- Underlying EBITDA (EBITDA explained) down 16% to $604 million
- Underlying net profit after tax (NPAT) drops 55% to $87 million
- Statutory loss after tax of $1.075 billion
- Result included $706 million impairment charges (after tax) because of AGL’s accelerated decarbonisation plan
- Total AGL customer services of 4.3 million, up 61,000 on FY22
- Interim dividend per share of 8 cents
AGL explained that this result reflected the impact of plant outages during “challenging energy market conditions in July, the prolonged Loy Yang unit 2 major outage caused by a generator rotor defect, and the closure of Liddell unit 3 in April 2022.”
But, it did say that as units have returned to service, it has seen a significant improvement in portfolio performance at the end of the first half.
It’s expecting to have higher earnings in the second half of FY23, and continued positive momentum into FY24. The business is expecting earnings growth in FY24 thanks to elevated prices compared to recent years.
Guidance for FY23
AGL has reduced the mid-point of its FY23 guidance. That’s not helpful for the AGL share price.
Underlying EBITDA guidance used to be between $1.25 billion to $1.45 billion. It’s now guided for between $1.25 billion to $1.375 billion.
Underlying NPAT guidance used to be between $200 million to $320 million. It’s now $200 million to $280 million.
AGL said that it expects to benefit as historical contract positions are reset in FY24 and FY25. Sustained periods of higher wholesale electricity prices are “expected to flow through to retail pricing outcomes.” I’m not sure households will like the sound of that.
Final thoughts on the AGL share price
The first six months were clearly painful for AGL’s financials. But, the business seems to be confident that things are about to start turning around.
AGL may be cheap if its earnings can rebound over the next few years, but it faces a lot of challenges, including creating a large amount of renewable energy generation. If investors believe in the turnaround, this could be a good time to consider the business.
