AGL Energy today reported a flat Underlying Profit of $431.1 million for the year ended 30 June 2011, up only by half a per cent over the previous financial year.
AGL said that the result was flat due to extreme hot weather events in eastern and southern Australia in February, which effectively reduced profit by $30-$35 million, as well as softer demand for electricity from its Loy Yang A power station in Victoria’s LaTrobe Valley.
AGL’s Retail Energy business seemed to perform strongly with a 17 per cent increase in EBIT to $373 million, due mainly to improvements in gross margin on mass market customers resulting from a combination of electricity and gas price (tariff) increases in all states and a net increase in customer numbers of 52,000. AGL’s total customer accounts increased by 1.6 per cent to 3.29 million.
AGL, having lost out to Origin Energy and TRUenergy in the purchase of retail energy assets as part of the NSW electricity privatisation process that completed in March this year, has had to rely on an organic growth strategy in New South Wales to grow its customer base. AGL seemed content with the start it had made in NSW adding 96,000 new electricity customers in the six months to 30 June 2011.
AGL also noted the high degree of competition in energy retail markets and that the introduction of the new Australian Consumer Law on 1 January 2011 that limited the hours of operation of door-to-door sales had appeared to have had no impact on the level of door knocking activity.
AGL claimed its churn rate of 19 per cent is below the industry average, reflecting improvements made in customer service. Origin also reported yesterday a very similar level of customer churn.
You can read AGL’s full earnings release on their website.