AGL Energy reported FY26 statutory profit of A$756 million, up A$644 million from the previous year, largely reflecting asset-sale and valuation gains, while underlying net profit fell 2% to A$631 million.

Australian utility AGL Energy reported a sharp rise in statutory profit for the year ended June 30, although its underlying earnings were broadly flat as softer wholesale electricity prices and higher gas costs weighed on the business.

Statutory profit after tax reached A$756 million, compared with A$112 million in FY25. The increase was driven in part by a A$268 million post-tax gain from AGL's sale of its 19.9% stake in Tilt Renewables, a A$179 million positive fair-value movement in financial instruments and a A$67 million gain from the revaluation of onerous contracts.

Those gains were partly offset by A$227 million in post-tax impairments related to generation assets and development projects and A$69 million in Retail Transformation costs.

On an underlying basis, which excludes significant items and fair-value movements, net profit fell 2% to A$631 million. Underlying EBITDA increased 2% to A$2.1 billion, in line with company guidance.

AGL said improved availability and flexibility across its generation fleet helped offset softer power-market conditions. Fleet availability rose 4.3 percentage points to 83.4%, while total generation declined 3.4% to 31.8 TWh.

The company said Australia's National Electricity Market experienced relatively low price volatility during the year amid milder weather, strong renewable generation, improved coal-fired plant availability, increasing battery capacity and fewer transmission constraints.

Gas margins, meanwhile, declined as lower-cost legacy supply contracts continued to expire and were replaced with more expensive supply.

For FY27, AGL expects underlying EBITDA of A$1.9 billion to A$2.2 billion and underlying net profit of A$470 million to A$670 million. The outlook factors in lower wholesale electricity prices flowing through contracted positions and higher gas costs, partly offset by cost reductions and a full year of earnings from the 500-MW Liddell Battery.

AGL is targeting A$50 million in sustainable annual operating-cost reductions by FY27, of which A$30 million was achieved during FY26.

The utility continues to expand its portfolio of flexible generation and storage as Australia's power system adds renewable capacity. Its flexible fleet reached 8.7 GW during FY26, including batteries, hydroelectric facilities and 3.3 GW of operational flexibility from coal-fired units.

AGL commissioned the Liddell Battery in July, is building the 500-MW Tomago Battery and has started construction of the 220-MW Kwinana Swift Gas 2 project in Western Australia. It has also signed two 15-year power purchase agreements with Tilt Renewables as it works toward adding 6 GW of renewable and firming capacity by 2030.

The company is also seeking capital partners for more than 2 GW of wind projects in its development pipeline, an approach intended to reduce the amount of capital AGL must commit directly while retaining exposure to new renewable generation.

One area facing higher costs is AGL's Retail Transformation Program. Following a review, the company now expects implementation to take up to 12 months longer and cost an additional A$100 million to A$150 million. Full annual pre-tax savings of A$70 million to A$90 million are now expected from FY30.

AGL declared a final dividend of 26 Australian cents per share, bringing its FY26 dividend to 50 cents. For FY27, the company is targeting a payout ratio of 55% to 60% of underlying net profit.

By Charles Kennedy for Oilprice.com

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