Agl Energy Limited · ASX:AGL
Agl Energy — H1 FY2023 Earnings Presentation
38 slides from Agl Energy's earnings presentation, Feb 9, 2023
Slide 1: FY23 Half-Year Result
FY23 Half-Year Result 9 February 2023
Slide 2: Results Highlights and Business Update; Strategy Update; Financial Overview
1 Results Highlights and Business Update Damien Nicks – Managing Director and CEO 4 Outlook Damien Nicks – Managing Director and CEO 2 Strategy Update Damien Nicks – Managing Director and CEO 5 Q&A 3 Financial Overview Gary Brown – Chief Financial Officer
Slide 3: Results Summary and Business Update
• Underlying EBITDA down 16% to $604 million; Underlying NPAT down 55% to $87 million; impacted by prolonged Loy Yang A Unit 2 outage caused by a generator rotor defect RESULTS • $(706) million of charges (post tax) taken for asset impairments and rehabilitation provision increase due to accelerated
Slide 4: Safety and Customers
Safety Customers Total Injury Frequency Strategic NPS Rate* (per million hours (Net Promoter Score) worked) +12 3.6 3.3 +6 +5 +2 2.3 2.1 1.7 (11) FY19 FY20 FY21 FY22 1H23 Jun-19 Jun-20 Jun-21 Jun-22 1H23 ✓ Consistent improvement since FY19, reflecting a disciplined and sustained ✓ Excellent result c
Slide 5: Customer growth, reduced churn and lower operating costs achieved in the period
Customer growth, reduced churn and lower operating costs achieved in the period Continued growth and value focus Improved retention and service quality Increased operational efficiency Customer services (‘000) Churn (%) Consumer net operating costs3 4,208 4,215 4,276 250 65 21.0% 19.5% 208 204 3,954
Slide 6: Strengthen our core business; accelerate future value pools
STRENGTHEN OUR CORE BUSINESS ACCELERATE FUTURE VALUE POOLS #1 20.1% Customer Markets 199 MW decentralised brand awareness Green Revenue assets under orchestration, in energy1 +1.8ppts vs FY223 +44% vs 1H22 Leading commercial >178 MW 52% behind-the-meter of commercial solar digital only customers ren
Slide 7: Managing flexibility and reliability of ageing thermal fleet
Managing flexibility and reliability Trading captured upside, Generation from of ageing thermal fleet minimised risk broader portfolio COMMERCIAL AVAILABILITY* VOLATILITY CAPTURED** GENERATION VOLUMES 65.2% 8.5 pp vs 1H22 54.8% 10.4 pp vs 1H22 19.1TWh 7.4% vs 1H22 • Excluding Liddell performance, th
Slide 8: Equivalent Availability Factor (%)
Reduced fleet availability driven by extended Loy Yang unit 2 outage and additional unplanned outages from Liddell as it approaches end of life Equivalent Availability and Outage Factors (%) H1 FY22 H2 FY22 H1 FY23 100% 100% 80% 80% Equivalent Availability Factor (%) Outage Factor (%) 60% 60% 40% 40
Slide 9: Reduction in derates and forced outages
Reduction in derates through increased maintenance on mills and precipitators Bayswater boiler chemical clean Reduction in forced outages through minimising known failure modes Improving preventative maintenance to reduce return to service times Bayswater generator upgrade Enhanced efficiency and fl
Slide 10: Progressively decarbonising and transitioning our generation portfolio
Progressively decarbonising and transitioning our generation portfolio • Liddell Power Station closure on track for April 2023; for a total emissions reduction (Scope 1 and 2) of 8 million tonnes per annum1 LEGEND • Torrens Island ‘B’ Power Station closure on 30 June 2026 Renewable and firming new b
Slide 11: Strategy Update
Strategy Update Damien Nicks, Managing Director and CEO Macarthur Wind Farm, Victoria
Slide 12: Connecting customers and transitioning our energy portfolio
Connecting our customers Transitioning our to a sustainable future energy portfolio 4.3 million services provided nationally - Ambition to add up to 12 GW of new helping our customers decarbonise the way generation and firming by end of 2035, requiring they live, work and move a total investment of
Slide 13: AGL's Decarbonisation Roadmap
AGL’s DECARBONISATION ROADMAP By end of 2025 Target by end of 2030 Continued ambition to be net zero 2023 by 2050 for Scope 1, 2 and 3 emissions Liddell Power Station closed Up to 5 GW 8 MtCO2e Renewable generation, firming Annual emissions reduction1 and DER capacity targeted to be in place Relentl
Slide 14: Strengthening our core business to unlock future value pools
STRENGTHENING OUR CORE BUSINESS… …TO UNLOCK FUTURE VALUE POOLS Leading energy retailer; large and diversified customer base Accelerate decarbonisation transition Protect and grow our brand leadership through compelling Expand our decarbonisation solutions for the way we live, work and move propositi
Slide 15: Connecting our customers to a sustainable future: today and near term focus
TODAY NEAR TERM FOCUS Connecting our customers • Growth in customer services and record • Accelerate growth of decentralised assets to a sustainable future high NPS under orchestration and electrification, underpinned by new technology • 199 MW of distributed energy under orchestration and #1 market
Slide 16: Financial Overview
Financial Overview Gary Brown, Chief Financial Officer Eildon Power Station, Victoria
Slide 17: Statutory NPAT and Underlying EBITDA
Statutory NPAT $(1,075)m Underlying EBITDA $604m (16)% Underlying NPAT $87m (55)% Net cash provided by operating activities $37m (94%) Dividends 8 cps (50%) Return on Equity 1.9% (5.4)pp AGL Energy FY23 Half-Year Result | 9 February 2023 17
Slide 18: Underlying Profit after tax
Underlying Profit after tax ($m) Customer Markets Integrated Energy Group-wide $m (pre-tax) Consumer Energy Electricity Margin portfolio management** AGL Energy FY23 Half-Year Result | 9 February 2023 *Underlying Profit after tax attributable to AGL shareholders 18 **Includes impact of Loy Yang Unit
Slide 19: Statutory to underlying profit, post-tax
Market / External Operational / Structural $m (post-tax) AGL Energy FY23 Half-Year Result | 9 February 2023 19
Slide 20: Operating costs excluding depreciation and amortisation
Operating costs excluding depreciation and amortisation ($m) Non-recurring AGL Energy FY23 Half-Year Result | 9 February 2023 20
Slide 21: Working Capital, Rating and headroom
$m 1H23 1H22 Working Capital Underlying EBITDA 604 723 Equity accounted income (9) (3) • Large working capital outflows in the half impacted operating cash flow, in particular payables and margin calls Accounting for onerous contracts (43) (67) Other assets/liabilities and non-cash items (61) 17 • S
Slide 22: Approximately $670 million total capital expenditure forecast for FY23
Approximately $670 million total capital expenditure forecasted for FY23; Delivering over $90 million sustaining capex reduction objective in FY23 (against FY21 baseline) Historic and forecast capital expenditure ($m) 900 800 700 FY23 growth capex primarily 600 related to Torrens and Broken Hill bat
Slide 23: Financial Overview - Growth
Financial Overview - Growth Gary Brown, Chief Financial Officer Construction of the 250 MW Torrens Island grid scale battery in South Australia, anticipated to be operational in mid-2023
Slide 24: Indicative ranges for channels to deliver the ~12 GW ambition
Indicative ranges for the primary channels to deliver the ~12 GW ambition Decentralised Energy AGL to source and orchestrate energy from its large retail and C&I customer base (rooftop solar, batteries, energy management solutions) and DER Decentralised 2 to 4 GW Owned and controlled assets Energy I
Slide 25: Expected post-tax returns for future investments
Expected post-tax returns • AGL’s existing customer load enables it to for future investments* pursue the best available opportunities to optimise returns on invested capital when sourcing its energy requirements Renewables 6.0% 8.5% • When self-developing, AGL expects to generate strong risk adjust
Slide 26: Outlook
Outlook Damien Nicks, Managing Director and CEO Wattle Point Wind Farm, South Australia
Slide 27: Underlying business fundamentals remain strong despite market interventions
Key components: Potential impacts on AGL and energy markets: Targeted support for low to medium income households and Customer bill rebates for eligible households and businesses welcomed, particularly for vulnerable customers small businesses (to be paid for by the government) Market events have se
Slide 28: Historical vs forward wholesale NEM electricity prices
Historical (spot) vs future (forward) wholesale NEM electricity prices 300 250 200 137 $ / MWh 150 100 91 50 44 - Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2020 2021 2022 2023 2024 NEM (Weighted average spot price) NSW FY24 Forward (Jan 2023) VIC FY24 Forward (Jan 2023) NSW FY24 Forward
Slide 29: FY23 guidance range narrowed
FY23 guidance range narrowed: • Underlying EBITDA between $1,250 and $1,375 million (previously between $1,250 and $1,450 million) • Underlying NPAT between $200 and $280 million (previously between $200 and $320 million) FY23 guidance reflects an expected improved second half, in line with expectat
Slide 30: Supplementary Information
Supplementary Information
Slide 31: Statutory NPAT to Underlying NPAT
$m 1H23 1H22 Change Statutory NPAT (1,075) 555 (1,630) Adjust for following post-tax items: Movement in onerous contracts (131) (316) 185 Impairments 706 4 702 Separation and re-integration costs 7 24 (17) Restructuring and integration costs - 12 (12) Wellington North Solar Farm (12) - (12) Movement
Slide 32: Generation volumes by asset and type
GWh 1H23 1H22 Change Asset AGL Macquarie – Bayswater 6,411 6,781 (5)% AGL Macquarie – Liddell 2,897 4,087 (29)% AGL Loy Yang 6,095 6,498 (6)% AGL Torrens 458 523 (12)% Barker Inlet 181 124 46% Kwinana Swift 70 0 100% SA wind 608 621 (2)% VIC hydro 736 287 156% VIC wind 355 551 (36)% NSW solar 212 14
Slide 33: Customer services by product and state
31 December 2022 (‘000) 30 June 2022 (‘000) Change Consumer Electricity 2,462 2,443 1% New South Wales 904 908 0% Victoria 760 737 3% South Australia 357 361 (1)% Queensland 441 437 1% Consumer Gas 1,528 1,510 1% New South Wales 615 618 (0)% Victoria 593 582 2% South Australia 137 136 1% Queensland
Slide 34: Electricity sales volumes
GWh 1H23 1H22 Change Consumer New South Wales 2,932 2,982 (2)% Victoria 2,206 2,061 7% South Australia 927 1,012 (8)% Queensland 1,317 1,341 (2)% Consumer total 7,382 7,396 0% Large Business New South Wales 2,293 1,992 15% Victoria 973 849 15% South Australia 617 610 1% Queensland 681 827 (18)% West
Slide 35: Gas sales volumes
PJ 1H23 1H22 Change Consumer New South Wales 8.7 8.7 - Victoria 18.6 19.1 (3)% South Australia 1.6 1.6 - Queensland 1.3 1.1 18% Western Australia 0.8 0.7 14% Consumer total 31.0 31.2 (1)% Large Business New South Wales 1.0 0.4 150% Victoria 2.4 2.6 (8)% South Australia 0.2 0.2 - Queensland 1.9 2.2 (
Slide 36: Capacity and carbon intensity by asset
Capacity* Carbon intensity 1H23 sent out Asset State Type Status (MW) (tCO2e/MWh) generation (GWh) AGL Macquarie - Bayswater NSW Black coal Owned 2,690 0.95 6,581 AGL Macquarie - Liddell NSW Black coal Owned 1,500 0.99 3,040 AGL Loy Yang VIC Brown coal Owned 2,210 1.27 6,257 Total coal 6,400 15,878
Slide 37: Important notice and disclaimer
• 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 announcements lodged with the Australian
Slide 38: Contact
Contact James Thompson Rehan Fernando Sophia Li Head of Investor Relations Manager – Investor Relations Treasurer Mobile: +61 403 183 563 Mobile: +61 498 010 668 Mobile: +61 476 809 190 Email: [email protected] Email: [email protected] Email: [email protected]