Energy generator and retailer AGL has reported a near trebling of full year profit, a result supported by higher power prices and favourable hedging contracts.
AGL’s 2018 net profit of $1.6 billion rose 194 per cent from the previous year of $539 million.
Its underlying profit, which excludes one-off items and changes in value in investments and hedging positions, rose 28 per cent to $1.02 billion, at the upper end of the company’s guidance.
The full year dividend increased 29 per cent to $1.17 per share.
“This increase in prices in the broader electricity market has mostly been a result of the abrupt closure of non-AGL power stations such as Hazelwood in 2017 and Northern in 2016 and higher input costs from coal and gas,” AGL chief executive Andy Vesey said.
“In this environment, we recognise that many Australian households are facing cost-of-living pressures because of the higher energy bills that have resulted from higher market prices”…
AGL is essentially a utility whose profits should not be growing so swiftly. Clearly, is has cashed in on the gas gouge that has sent energy prices, including electricity, soaring.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
