AGL Energy Sees Stronger 2027 Profit on Battery Push, Cost Cuts

AGL Energy has projected a stronger-than-expected profit for fiscal 2027, banking on its expanding battery portfolio and lower operating costs to counter softer wholesale electricity prices.

The Melbourne-based utility on Wednesday forecast underlying net profit after tax for 2027 in the range of A$470 million to A$670 million. The midpoint of that guidance sits above a Visible Alpha consensus estimate of A$550.8 million.

AGL said stable retail energy margins and the full-year contribution from its newly commissioned 500-MW Liddell Battery in New South Wales would support earnings. However, the company cautioned that lower wholesale electricity prices flowing through contracted positions and higher gas costs, as low-cost legacy contracts expire, would weigh on results.

Construction is underway on the 500-MW Tomago Battery and the Kwinana Swift Gas 2 project, the company added.

The guidance comes after AGL reported an underlying net profit after tax of A$631 million for the year ended June 30, down slightly from A$640 million a year earlier and below a Visible Alpha consensus of A$636.3 million. The company attributed the decline to lower wholesale electricity prices, as easing supply constraints and milder weather reduced market volatility.

"Gross margin across our gas portfolio decreased due to an increase in gas purchase costs, reflecting the gradual roll-off of lower-priced legacy gas supply contracts during the year," said Managing Director and CEO Damien Nicks.

AGL declared a final dividend of 26 Australian cents per share, up from 25 cents a year earlier.

The company also said it is in talks with potential investment partners for more than 2 GW of renewable energy projects, as it seeks to improve capital efficiency while progressing its energy transition plans.

Shares of AGL rose as much as 6.1% to A$8.730, marking their biggest intraday percentage gain since February 11 and their highest level since June 15.