The AGL Energy Limited (ASX: AGL) share price has jumped more than 12% after the ASX energy share reported its HY24 result.
HY24 result
Here are some of the main numbers from the six months to 31 December 2023:
- Underlying EBITDA (EBITDA explained) rose 78% to $1.07 billion
- Underlying net profit after tax (NPAT) increased 359% to $399 million
- Statutory NPAT of $576 million
- Interim dividend of $0.26, up 225%
The statutory NPAT included a positive movement in the fair value of financial instruments of $297 million. In other words, the value of particular assets went up $297 million. Strong profit is great news for the AGL share price.
AGL said the first half was driven by improved power generation availability, more stable market conditions and higher wholesale electricity pricing.
The total number of AGL customer services increased 13,000 to 4.3 million, with an improvement in the net promoter score (NPS), or customer satisfaction, to +7.
AGL revealed 800MW of new grid scale batteries are in operation, in testing or are under construction. The 250MW Torrens Island battery became operational in August 2023. Construction has commenced on the 500MW Liddell battery in NSW.
The development pipeline has increased from 5.3GW to 5.8GW.
Outlook for the AGL share price
AGL decided to narrow its underlying earnings guidance range for FY24.
Underlying EBTDA is now expected to be between $2.025 billion to $2.175 billion, compared to the previous guidance of between $1.875 billion to $2.175 billion.
The underlying net profit after tax is expected to be between $680 million to $780 million, up from $580 million to $780 million.
This guidance change reflects the strong first half, higher electricity prices, improved plant availability and flexibility, and the start of operation of the constructed batteries.
However, it is seeing higher operating costs due to CPI, higher variable costs, business transformation costs and investment in generation fleet.
While that’s promising in the short-term, wholesale prices have come down, which may not be reflected until future financial years. But, the wholesale price may not stay low – it could rise again.
The AGL share price has already jumped, so I wouldn’t call it a buy at this higher level. But, there are other ASX dividend shares I’d rather invest in for defensive earnings and income which have a more clear growth outlook.
