Energy giant AGL’s outlook brightens despite high customer churn

Rising wholesale prices for electricity and improved reliability across AGL’s fleet of power stations have led to a sharp turnaround in the energy giant’s profits even as it lost customers who were shopping around to save on their energy bills.

The ASX-listed power, gas and telecommunications supplier on Thursday reported a half-year underlying net profit of $399 million and upgraded its full-year earnings guidance towards the top end of its forecasts. The company now expects to report an underlying full-year net profit between $680 million and $780 million, up from the $580 million to $780 million previously forecast.

AGL’s Loy Yang Power Station in the Latrobe Valley in Victoria.
AGL’s Loy Yang Power Station in the Latrobe Valley in Victoria.Credit: Bloomberg

AGL posted a $1.26 billion loss last financial year when its revenues were disrupted by costly coal-fired power station breakdowns, and it was forced to write down the value of one of its coal plants.

“Our first half result was driven by improved fleet availability and flexibility, more stable market conditions, along with the impact of higher wholesale electricity pricing from prior periods being reflected in pricing outcomes and contract positions,” AGL boss Damien Nicks said.

But while the company was growing its overall customer base, churn among its 4.3 million customers hit new highs.

“In a period of heightened market activity, where we saw customer churn reach the highest levels for several years, I am pleased that we have seen growth in our overall customer services numbers, largely driven by our growing telecommunications business,” Nicks said.

More to come…

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