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Archive for the ‘Financial Results’ Category

AGL profit grows 22 per cent on back of retail

Tuesday, March 2nd, 2010

AGL has posted impressive half year results, growing its revenues by 7 per cent to $3.2 billion for the 6 months to 31 December 2009. AGL’s underlying profit increased by a whopping 22 per cent to $235 million for the half-year.

AGL’s retail business was a significant contributor to the strong results. Despite a milder winter period where gas sales were down by 13 per cent on the previous year, AGL managed to increase its profitability largely thanks to 16-20 per cent increases in the regulated retail electricity tariffs in NSW and Queensland in July 2009 as well as market price increases in Victoria and South Australia.

AGL now has 3.22 million retail customers, up by 23,800 for the half year. Data on the number of customers lost during the period was not available but AGL reported an average customer churn rate of 14.8 per cent, which compares favourably to the 17 per cent average churn reported by Origin Energy last week and the quoted industry average churn rate of 18 per cent.

You can read more about these results in AGL’s Investor Presentation.

Despite a mild winter period where gas sales were down by 13.3% on the previous year, mass market gross margin performed strongly
to the prior period. Increases were primarily driven by regulatory and contract price outcomes as well as targeting of higher value
segments.
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Origin Energy profit up, churns 236K retail customers

Friday, February 26th, 2010

Despite eye-catching headlines in today’s papers about Origin Energy’s 94 per cent fall in first-half profit, the underlying numbers tell a different story with the energy company reporting a 28 per cent increase in underlying profit to $355 million for the six months to 31 December 2009.

The huge differential between these figures relates to Origin selling its interest in Australia Pacific LNG, which provided an extraordinary gain of $6.7 billion in last half’s profit.

Interestingly, despite increasing competition in the retail electricity and gas markets, Origin managed to increase its underlying retail EBITDA by 7 per cent to $320 million, due to “improved gross profit from natural gas and LPG together with benefits from a lower cost of serving our customers”.

However, a closer look at the retail numbers shows that Origin suffered a customer churn rate of 17 per cent, with churn of electricity customers in the competitive Victorian and Queensland markets being the highest at 26 per cent and 21 per cent respectively. The company lost 236,000 retail customers in the last 6 months but managed to re-acquire 232,000 customers for an overall net loss of 4,000 customers for the period. However, Origin was very fortunate to benefit from the free transfer of 17,000 customers when Jackgreen entered voluntary administration. Without this unexpected boost Origin would have been down 21,000 customers.

Whilst these numbers appear small compared to Origin’s customer base of 2.6 million it does show the significant challenge it faces maintaining its retail market share, especially if it wishes to maintain margins.

If you are interested, you can read more about Origin Energy’s financial results here.

Statutory net profit after tax was $371 million for the period, compared with $6.7
billion in the prior first half. The prior first half contained a significant item relating
to a gain on the dilution of Origin’s interest in Australia Pacific LNG which provided a
benefit of $6.7 billion in the statutory profit for that period.
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AGL posts solid results

Thursday, February 26th, 2009

AGL announced a $1.65 billion half-year profit – sounds like a great result, doesn’t it? However, this impressive figure was due primarily to profits from asset sales. AGL’s underlying profit, excluding these one-off gains, rose by 5 per cent to $192.5 million. A solid rather than impressive result that came in below analysts’ expectations.

From a consumer perspective, the most surprising news concerned AGL’s retail business, which sells electricity and gas to consumers and businesses. The retail division managed to improve its profits (EBIT) by 8 per cent, due to higher gas consumption over winter as well as price increases.

Switchwise analysis shows that AGL is one of the more expensive suppliers from which consumers can buy their electricity and gas supplies. It appears that many consumers either aren’t terribly price-sensitive or they don’t know that they have the option to choose from many, cheaper, alternative suppliers. It’s time to put on your skates and compare energy prices offered by other energy companies!

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