AGL Energy shares rise on strong earnings outlook

AGL Energy Ltd. shares surged on Wednesday after the Australian utility upgraded its full-year earnings guidance, citing stronger-than-expected wholesale electricity prices and improved operational performance.

The company raised its underlying profit forecast for the 2024 financial year by 15% to A$1.2 billion ($790 million), up from a previous range of A$900 million to A$1.1 billion. AGL attributed the upgrade to higher energy prices in Australia’s National Electricity Market and cost efficiencies achieved across its portfolio.

AGL Energy’s stock rose as much as 6.5% intraday, outpacing broader market gains. The company also reaffirmed its dividend guidance, maintaining a payout ratio of 70% to 80% of underlying profit. Analysts at Macquarie and UBS noted the upgrade reflected resilient demand and favorable market conditions, though they warned of potential volatility in energy prices ahead.

The earnings revision follows AGL’s recent operational improvements, including the restart of its Loy Yang A power station in Victoria, which had been offline for maintenance. The facility’s return has helped stabilize supply amid tight market conditions.

AGL Energy, one of Australia’s largest energy providers, has faced regulatory scrutiny over its coal-fired power stations but remains a key player in the country’s transition to renewable energy. The company has committed to closing its coal plants by 2035 as part of its decarbonization strategy.

Investors will monitor the company’s progress in balancing its traditional energy assets with its renewable energy investments, particularly as Australia accelerates its shift toward cleaner power sources.