By David Winning

SYDNEY--AGL Energy narrowed its annual guidance ranges, but signaled a moderation in earnings in its fiscal second half as competition for customers remains intense and seasonal shifts in weather patterns reduce demand for natural gas and electricity.

AGL said it now expects underlying earnings before interest, tax, depreciation and amortization of between A$1.935 billion Australian dollars (US$1.21 billion) and A$2.135 billion. That represents a slimmer range than initially provided to investors of A$1.87 billion-A$2.17 billion, and compares to A$2.22 billion in fiscal 2024.

AGL also tightened guidance for underlying net profit to a range of A$580 million to A$710 million, from a prior forecast of A$530 million-A$730 million.

"Narrowing of FY 2025 guidance reflects a strong first half performance, with earnings expected to moderate in the second half," AGL said on Wednesday.

It cited increases in depreciation, amortisation and finance costs among other reasons for the likely moderation in second-half profit.

AGL is in the midst of a big build out of renewable energy infrastructure as it charts a future beyond burning coal to generate power. Tensions over its contributions to greenhouse gas emissions came to a head around three years ago when major shareholders, including Atlassian co-founder Mike Cannon-Brookes, scuttled a plan to separate its power-generation business from its retail arm.

AGL has brought into operation batteries in Torrens Island and Broken Hill and it has begun building a A$750 million battery at the site of its closed Liddell coal-fired power plant. The company also hopes to develop new solar farms, pumped hydro projects and gas peakers.

Chief Executive Damien Nicks said AGL's growing battery portfolio delivered strong earnings in the six months through December, but its result was hurt by compressed margins in its customer-facing businesses due to lower pricing and heightened market competition.

Underlying profit, which strips out one-off items, totaled A$373 million in the six-month period, down from A$399 million a year ago. That led AGL to pare its interim dividend to 23 cents a share, from 26 cents a year ago. AGL's dividend policy is to pay out 50-75% of underlying profit after tax.

AGL's half-year net profit totaled A$97 million, down from A$576 million a year ago. The result was weighed down by some A$245 million of significant items, including a A$165 million increase to provisions for onerous contracts. Revenue rose by 15% to A$7.13 billion.

"Importantly, these results mean we are on track to deliver full-year earnings in line with our FY25 guidance range, and the reinstatement of a fully franked dividend for our shareholders," Nicks said.

Write to David Winning at david.winning@wsj.com

(END) Dow Jones Newswires

February 11, 2025 17:01 ET (22:01 GMT)

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