On Friday morning, power company AGL Energy [ASX:AGL] had its stocks soaring by more than 12% after the group posted a profit guidance upgrade as part of its investor presentation.
By lunchtime, AGL’s share price had surged by over 12% to $10.84 a share, taking its monthly metrics up by 23% — a 34% gain so far in 2023.
In its sector, the power stock has a 16% advantage and is also 23% higher than the broader market’s 12-month average:
Source: TradingView
AGL refines and upgrades profit and earnings guidance
Today, AGL was making headlines with its latest on earnings guidance and business conditions while presenting for its Investor Day — talking FY23 and FY24 earnings, profits and dividends.
The power touched on its overall business strategy, growth plan, operations and financial performance. However, perhaps the biggest highlight was the group’s decision to upgrade and refine its earnings and profits guidance.
AGL has enhanced earnings guidance for FY2023 to a range of $1.3 billion–1.375 billion, from $1.25 billion–1.375 billion, as previously provided.
The group’s underlying profit guidance was also revised to between $255 million–285 million, from a previous forecast of $200 million–280 million.
AGL stated that these were changes that reflected on improving conditions which are expected to continue into the second half of the year.
For fiscal 2024, AGL predicts between $1.875 billion–2.175 billion in underlying earnings and between $580 million–780 million in underlying profit after tax. This sudden upgrade is due to higher electricity prices and an increase in plant production.
AGL has now decided that it will be paying a dividend payout ratio of 50–75% of underlying profit after tax — to be completely franked — instead of a payout ratio of 75%, as was its previous policy.
The Australian power supplier hinted at perhaps beginning to pay partly franked dividends from the interim fiscal 2025 dividend.
CEO and Managing Director of AGL, Damien Nicks, said:
‘I’m very pleased to say we have positive momentum in terms of operational performance, continued customer growth and progress against the delivery of our strategy.
‘The improved generation performance in the second half alongside improvements in our customer business, has been reflected in the narrowing of FY23 guidance.
‘Looking ahead to FY24, without the challenging energy market conditions that we saw at the start of this financial year, namely widespread planned and unplanned outages coupled with unprecedented market volatility, we expect FY24 to be a stronger year as we see the sustained recovery of wholesale electricity prices roll through.’
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Regards,
Mahlia Stewart
For The Daily Reckoning Australia
