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Investors have caned energy giant AGL this morning after its profit outlook fell shy of previous predictions, with the stock down more than 7.5% at one point.
The prompt was the firm’s release of half-year results, including its net loss of $1.075bn that was widely expected after write downs.
A halving of underlying profit to $87m didn’t help, nor did a narrowing of the guidance range for FY23. It now expects underlying EBITDA (a profit measure) of $1.25bn to $1.375bn, versus as much as $1.45bn previously.
Similarly, rather than producing an underlying net profit of between $200m-$320m, it now expects the range to be $200m-$280m.
Some of that paring back of profits to come seems to stem from the Albanese government’s intervention to lower wholesale power prices via caps on black coal and gas costs.
According to AAP, new AGL CEO Damien Nicks said the invention, including in the form of a mandatory code of conduct for gas extractors, “has increased regulatory instability and uncertainty”.
“Policy certainty and clarity is key to encouraging new investment required for the transition,” he said.
Mind you, policy certainty is not something AGL has delivered to investors of late.
Recall this company had plans to split into “dirty AGL” with its coal plants in one firm, and a “clean AGL” of renewables and retailing. That was before billionaire Mike Cannon-Brookes – stymied in a takeover bid – snapped up 11% of shares and canned the whole demerger plan.
Cannon-Brookes wasn’t happy at the pace of decarbonisation of the country’s biggest polluter, and shook up AGL’s board to make sure the company gets out of coal earlier.
By April we’ll see more proof of that with the closure of the remaining three units (about 1260 megawatts’ worth) of the Liddell power station in the Hunter Valley.
This closure has been more than seven years in the making and, ironically, would have happened sooner if not for a quixotic intervention by the Turnbull government to browbeat AGL into keeping it open longer.
Governments intervene, it seems, in mysterious and unpredictable ways.