Agl Energy Limited · ASX:AGL
Agl Energy — FY2023 Earnings Presentation
37 slides from Agl Energy's earnings presentation, Aug 10, 2023
Slide 1: FY23 Full-Year Result
Use content from Slide 15 for content…scripting FY23 Full-Year Result 10 August 2023
Slide 2: Agenda
Agenda 1 Results Highlights and Business Update Damien Nicks – Managing Director and CEO 3 Outlook Damien Nicks – Managing Director and CEO 2 Financial Overview Gary Brown – Chief Financial Officer 4 Q&A
Slide 3: Executing on our refreshed strategy and decarbonisation plan
Executing on our refreshed strategy and decarbonisation plan Connecting our customers Transitioning our to a sustainable future energy portfolio Helping our customers Ambition to add ~12 GW of new generation decarbonise the way they and firming by the end of 2035, while live, move and work running s
Slide 4: Supporting our customers in need
Supporting our customers in need Enhanced Customer Support package (> $70 million over 2 years) aimed at helping our customers experiencing vulnerability to manage cost of living pressures INITIATIVES INCLUDE: • Targeted payment matching and debt relief Direct financial • Bill credits for customers
Slide 5: FY23 result reflects materially improved second half from increased plant availability
FY23 result reflects materially improved second half from increased plant availability, with a further uplift in earnings expected in FY24 • Underlying EBITDA up 12% to $1,361 million; Underlying NPAT up 25% to $281 million – Stronger wholesale electricity and gas pricing realised in earnings, partl
Slide 6: The last twelve months saw positive momentum build within the business
The last twelve months saw positive momentum build within the business as we forged ahead with the transformation of AGL Defined business strategies Strong underlying core Highly experienced Board Strong capital market and decarbonisation plan business fundamentals and Management teams in place supp
Slide 7: Material improvement in employee engagement; higher TIFR
Material improvement in employee engagement; Higher TIFR driven by increase in low-impact injuries Safety Customers People Total Injury Frequency Strategic NPS Employee engagement Rate (TIFR)* (per million (Net Promoter Score) score hours worked) 3.3 67% 2.8 +6 +5 73% +5 62% 57% 2.3 2.1 +2 FY20 FY21
Slide 8: Strong performance in Customer Markets delivering growth in services
Strong performance in Customer Markets delivering growth in services, improved margin and stable net operating costs 4.3 million customer services Continued outperformance to market churn Stable net operating costs per service Customer services (‘000) Churn (%) Consumer net operating costs3 4,271 11
Slide 9: Delivering on Customer Markets' strategic priorities
Delivering on Customer Markets’ strategic priorities to support customers to electrify and decarbonise LIVE MOVE WORK LEADING RESIDENTIAL SOLUTIONS DRIVING E-MOBILITY COMMERCIAL DECARBONISATION AT SCALE 445k carbon neutral services Partnership with bp pulse to #1 market share in commercial +13.6% vs
Slide 10: Higher availability achieved across the fleet
Higher availability achieved across the fleet Managing flexibility and reliability Trading captured upside, Generation from of ageing thermal fleet minimised risk broader portfolio THERMAL FLEET COMMERCIAL AVAILABILITY VOLATILITY CAPTURED3 GENERATION VOLUMES (EXCLUDING LIDDELL) 75.9%1 6.6 pp vs FY22
Slide 11: Total fleet Equivalent Availability Factor of 76.8% achieved in FY23
Total fleet Equivalent Availability Factor (EAF) of 76.8% achieved in FY23 Improved thermal fleet availability driven by a reduction in unplanned outages in the second half FY22 FY23 100% 100% Equivalent Availability Factor (%) 80% 80% Outage Factor (%) 60% 60% Material reduction in thermal 40% unpl
Slide 12: Flexibility upgrades at Bayswater and Loy Yang A delivering benefits
Flexibility upgrades at Bayswater and Loy Yang A are delivering operational and financial benefits to AGL • Thermal fleet flexibility strategically important to mitigate the Typical mild summer day in New South Wales (January 2023) Demand and spot electricity pricing profile impacts of lower custome
Slide 13: Our ambitious strategic targets for end of FY27
Our ambitious strategic targets for end of FY27 align with our longer-term transition plan Our purpose - Powering Powering Australian Australian Life Life Customer NPS Digital only Speed to market Green revenue Cumulative customer leadership customers improved expanded assets installed +20 60% by 80
Slide 14: Financial Overview
Financial Overview Gary Brown – Chief Financial Officer
Slide 15: FY23 result reflects increase in Customer Markets and Integrated Energy earnings
FY23 result reflects increase in Customer Markets and Integrated Energy earnings; operating cash flow impacted by working capital STATUTORY NET PROFIT AFTER TAX: Underlying profit reflects materially improved second half from increased plant availability UNDERLYING PROFIT AFTER TAX: $(1,264)m Statut
Slide 16: Stronger wholesale electricity and gas pricing realised in earnings
Stronger wholesale electricity and gas pricing realised in earnings, partly offset by the impact of the prolonged Loy Yang A Unit 2 outage Underlying Profit after tax ($m) Customer Markets Integrated Energy Group-wide Net $(66) million FY23 market volatility $m (pre-tax) impact of $(135) million and
Slide 17: AGL has broadly delivered on FY23 commitment to maintain operating costs within CPI
AGL has broadly delivered on the FY23 commitment to maintain operating costs within CPI growth, excluding non-recurring items Operating costs excluding depreciation and amortisation ($m) Forecast growth in core operating costs in FY24 is in line with CPI, however, Non-recurring further costs are exp
Slide 18: AGL continues to invest to strengthen its core business
AGL continues to invest to strengthen and drive value from its core business and to realise opportunities from the energy transition Historic and forecast capital expenditure ($m) 1,000 • Step up in growth capital spend on energy transition 800 assets, with near-term focus on utility scale battery C
Slide 19: Investment expected to drive higher depreciation and amortisation
This investment in the transformation of our business is expected to drive higher depreciation and amortisation over the medium term Depreciation and amortisation expense ($m) Expected drivers of higher medium-term D&A expense: FY23 to FY24 estimated FY22 to FY23 up $11m • Accelerated closures of Lo
Slide 20: Strong cash flow generation in the second half
Strong cash flow generation in the second half lifting cash conversion above 80% $m FY23 FY22 Working Capital Underlying EBITDA 1,361 1,218 Equity accounted income 4 (9) Accounting for onerous contracts • Underlying operating cash flow 32% lower than FY22 (120) (158) Other assets/liabilities and non
Slide 21: Successful debt refinancing reflects confidence in AGL's fundamentals
Successful debt refinancing reflects confidence in AGL’s business fundamentals, strategy and decarbonisation plan Future refinancing focused on FY25 and FY26 maturities and funding future green renewable and firming asset growth Rating and headroom Debt Maturity Profile as at 30 June 2023 ($m) • Baa
Slide 22: AGL will prudently allocate capital to transition the portfolio
AGL will prudently allocate capital to transition the portfolio and drive shareholder returns DISCIPLINED AND STRATEGIC APPROACH TO CAPITAL ALLOCATION OBJECTIVES Maintain financial strength Capital investment to Maximize value and and financial flexibility maintain, transition and shareholder return
Slide 23: Outlook
Outlook Damien Nicks – Managing Director and CEO Hallett Wind Farms, South Australia
Slide 24: Current forward pricing for FY25 broadly in line with FY24
Current forward pricing for FY25 broadly in line with FY24 Forward curve movements for wholesale electricity pricing swaps (NSW and Victoria) • AGL’s generation portfolio is realised through a $170 contract book with Consumer, Large Business, and $160 Wholesale customers, and hedging arrangements $1
Slide 25: FY24 earnings guidance maintained
FY24 earnings guidance maintained (as announced on 16 June 2023) FY24 guidance range: • Underlying EBITDA between $1,875 and $2,175 million • Underlying NPAT between $580 and $780 million FY24 guidance reflects an expected uplift in earnings, with the following drivers: • Sustained periods of higher
Slide 26: Appendix
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Slide 27: FY23 Financial Result Summary
FY23 Financial Result Summary FY23 Change from FY22 Statutory NPAT $(1,264)m Underlying EBITDA $1,361m 12% Underlying NPAT $281m 25% Net cash provided by operating activities $912m (26%) Dividends 31 cps 19% Return on Equity 4.9% 1.2pp Return on Capital Invested 5.7% 0.9pp Adjusted Return on Capital
Slide 28: Reconciliation of Statutory Profit to Underlying Profit
Reconciliation of Statutory Profit to Underlying Profit $m FY23 FY22 Change Statutory NPAT (1,264) 860 (2,124) Adjust for following post-tax items: Impairments 680 162 518 Restructuring and integration costs 21 42 (21) Separation and re-integration costs 10 89 (79) Movement in rehabilitation provisi
Slide 29: Reconciliation of Statutory Profit to Underlying Profit
Reconciliation of Statutory Profit to Underlying Profit Market / External Operational / Structural $m (post-tax) AGL Energy FY23 Full-Year Result | 10 August 2023 29
Slide 30: Pool Generation volume
Pool Generation volume GWh FY23 FY22 Change Asset AGL Macquarie – Bayswater 12,916 13,574 (5)% AGL Macquarie – Liddell 5,020 7,336 (32)% AGL Loy Yang 12,418 13,417 (7)% AGL Torrens 687 990 (31)% Barker Inlet 280 295 (5)% Kwinana Swift 102 54 89% SA wind 1,177 1,230 (4)% VIC hydro 1,092 579 89% VIC w
Slide 31: Customer services
Customer services (‘000) 30 June 2023 30 June 2022 Change Consumer Electricity 2,439 2,443 0% New South Wales 890 908 (2)% Victoria 758 737 3% South Australia 356 361 (1)% Queensland 435 437 0% Consumer Gas 1,524 1,510 1% New South Wales 606 618 (2)% Victoria 592 582 2% South Australia 139 136 2% Qu
Slide 32: Electricity sales volumes
Electricity sales volumes GWh FY23 FY22 Change Consumer New South Wales 5,748 5,796 (1)% Victoria 4,280 4,094 5% South Australia 1,809 1,886 (4)% Queensland 2,700 2,595 4% Consumer total 14,537 14,371 1% Large Business New South Wales 4,476 4,335 3% Victoria 1,980 1,824 9% South Australia 884 1,232
Slide 33: Gas sales volumes
Gas sales volumes PJ FY23 FY22 Change Consumer New South Wales 16.1 15.9 1% Victoria 32.0 32.0 0% South Australia 2.7 2.7 0% Queensland 2.4 2.3 4% Western Australia 1.3 1.2 8% Consumer total 54.5 54.1 1% Large Business New South Wales 1.6 1.4 14% Victoria 4.1 5.0 (18)% South Australia 0.3 0.3 0% Que
Slide 34: Generation portfolio performance
Generation portfolio performance Capacity* Carbon intensity FY23 sent out Asset State Type Status (MW) (tCO2e/MWh) generation (GWh) AGL Macquarie - Bayswater NSW Black coal Owned 2,715 0.95 13.25 AGL Macquarie - Liddell NSW Black coal Owned - 1.00 5.26 AGL Loy Yang VIC Brown coal Owned 2,210 1.29 12
Slide 35: Onshore development pipeline advanced by over 60% to 5.3 GW
Onshore development pipeline advanced by over 60% to 5.3 GW Queensland Battery 500 MW Legend Muswellbrook Pumped Hydro 250- 400 MW / 8-hour duration Bowmans Creek Wind Farm Existing development pipeline Targeted FID FY26 350-450 MW Liddell Battery New addition to pipeline* Broken Hill Battery 500 MW
Slide 36: AGL's gas portfolio is well balanced to FY27
AGL’s gas portfolio is well balanced to FY27 New gas supply agreements with Cooper Energy, Senex, ExxonMobil and others executed in FY23 AGL’s East Coast gas position Strategic supply options • Active engagement and support of smaller producers to underwrite 140 new gas supplies • Partnerships with
Slide 37: Disclaimer and important information
Disclaimer and important information • The material in this presentation is general information about AGL’s activities as at the date of this presentation. It is provided in summary form and does not purport to be complete. It should be read in conjunction with AGL’s periodic reporting and other ann