Agl Energy Limited · ASX:AGL
Agl Energy — FY2023 Earnings Presentation
41 slides from Agl Energy's earnings presentation, Aug 10, 2023
Slide 1: ASX & Media Release: FY23 Results Presentation
AGL Energy Limited Locked Bag 3013 Level 24, 200 George St T: +61 2 9921 2999 ABN: 74 115 061 375 Australia Square NSW 1215 Sydney NSW 2000 F: +61 2 9921 2552 Australia Australia www.agl.com.au ASX & Media Release FY23 Results Presentation 10 August 2023 Attached is AGL Energy Limited’s Full Year Re
Slide 2: FY23 Full-Year Result
Use content from Slide 15 for content…scripting FY23 Full-Year Result 10 August 2023 1
Slide 3: Agenda: Results Highlights, Financial Overview, Outlook, Q&A
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 [DAMIEN NICKS] Good morning, everyone. Damien Nicks speaking. Thank you for joining us for the webcast
Slide 4: Connecting customers to a sustainable future; transitioning energy portfolio
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 safely and delivering operational and trading excellence Poise
Slide 5: Enhanced Customer Support package
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 on Staying Connected support prog
Slide 6: FY23 results summary
• Underlying EBITDA up 12% to $1,361 million; Underlying NPAT up 25% to $281 million – Stronger wholesale electricity and gas pricing realised in earnings, partly offset by increased operating costs and lower generation due to prolonged Loy Yang A Unit 2 outage (caused by a generator rotor defect) a
Slide 7: Key milestones over the year
Defined business strategies Strong underlying core Highly experienced Board Strong capital market and decarbonisation plan business fundamentals and Management teams in place support for AGL’s transition Refreshed strategy and Permanent CEO and CFO Successful debt E-mobility partnership accelerated
Slide 8: Investor Day update and development pipeline
FY24. And finally, at our Investor Day in mid-June, we had the privilege of sharing further detail on our business strategies and accelerated decarbonisation plan, driving market confidence in AGL’s direction through the transition. We also announced an over 60 percent increase in our development pi
Slide 9: Safety, Customers, People metrics
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% 2.3 57% 2.1 +2 FY20 FY21 FY22 FY23 Jun-20 Jun-21 Jun-22 Jun-23 FY20 FY21 FY22 FY23 Q4 Q4 Q4 Q4 *For employees and contracto
Slide 10: Customer Markets performance
4.3 million customer services Continued outperformance to market churn Stable net operating costs per service Customer services (‘000) Churn (%) Consumer net operating costs3 4,271 113 4,208 4,215 19.4% 19.6% 108 18.7% 102 3,954 292 17.5% 99 196 246 439 444 433 168 415 117 125 78 93 15.6% 14.3% 14.3
Slide 11: Partner of choice: Live, Move, Work
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 FY22 give EV drivers access to simple solar 1 and affordable charging Expanding EV capabilities with L
Slide 12: Decentralised assets under orchestration and green revenue
Decentralised assets under orchestration is 47 percent higher, and the power of technology and automation is being harnessed with over five million transactions managed by artificial intelligence. Additionally, we continue to grow our decarbonisation portfolio, with Customer Markets green revenue no
Slide 13: Integrated Energy: thermal availability, trading, generation
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 57.4% 0.4 pp vs FY22 31.9 TWh1 4.5% vs FY22
Slide 14: Equivalent Availability Factor
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% unplanned outages relative to FY22, 40% particularly in the second half 20% 20%
Slide 15: Thermal fleet flexibility
• 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 customer demand / negative pool pricing during daytime periods of peak solar generation 12000 300 • All four Bayw
Slide 16: Our purpose - Powering Australian Life
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%1 85%+ +300 MW3 (Strategic NPS) Increase in green behind the meter revenue from FY192 FY23
Slide 17: Financial Overview
Financial Overview Gary Brown – Chief Financial Officer [GARY BROWN] Thank you, Damien and good morning, everyone. 14
Slide 18: FY23 financial summary
STATUTORY NET PROFIT AFTER TAX: Underlying profit reflects materially improved second half from increased plant availability UNDERLYING PROFIT AFTER TAX: $(1,264)m Statutory loss driven by impairment charges due to DIVIDENDS AGL’s targeted earlier closure dates of thermal $281m up 25% 31 cps up 19%
Slide 19: Underlying profit after tax bridge
Underlying Profit after tax ($m) Customer Markets Integrated Energy Group-wide Net $(66) million FY23 market volatility $m (pre-tax) impact of $(135) million and LY2 outage of $(38) million offset by FY22 impact $107 million $(41) million variance driven by: • $(43) million rehabilitation provision
Slide 20: Earnings commentary
materially improved earnings compared to the first half. The strong performance of our gas portfolio, consistent with the first half, reflected higher global commodity pricing which increased the revenue for our gas portfolio. Additionally, AGL’s prudent trading performance during this period of hig
Slide 21: Operating costs
Operating costs excluding depreciation and amortisation ($m) Forecast growth in core operating costs in FY24 is in line with CPI, however, Non-recurring further costs are expected from additional investment in the operations of business : • Customer support and costs relating to revenue uplift: • La
Slide 22: Historic and forecast capital expenditure
Historic and forecast capital expenditure ($m) 1,000 • Step up in growth capital spend on energy transition 800 assets, with near-term focus on utility scale battery Commissioning of projects Torrens and Broken 600 Hill batteries • Continued investment in Includes underlying thermal fleet performanc
Slide 23: Depreciation and amortisation expense
Depreciation and amortisation expense ($m) Expected drivers of higher medium-term D&A expense: FY23 to FY24 estimated FY22 to FY23 up $11m • Accelerated closures of Loy uplift of $40-50m Yang A and Bayswater Accelerated (partially offset by closure of Loy Increased Yang A Impairment Increased Retail
Slide 24: Cash flow
$m FY23 FY22 Working Capital Underlying EBITDA 1,361 1,218 Equity accounted income 4 (9) Accounting for onerous contracts • Underlying operating cash flow 32% lower than FY22 (120) (158) Other assets/liabilities and non-cash items (9) 86 driven by working capital outflows, particularly in Rehabilita
Slide 25: Debt refinancing, maturity profile and net debt
Future refinancing focused on FY25 and FY26 maturities and funding future green renewable and firming asset growth Rating and headroom Debt Maturity Profile as at 30 June 2023 ($m) • Baa2 (stable outlook) rating confirmed by Moody’s 1,100 – 31.0% FFO to net debt 1,000 – Continued commitment to an in
Slide 26: Capital allocation framework
DISCIPLINED AND STRATEGIC APPROACH TO CAPITAL ALLOCATION OBJECTIVES Maintain financial strength Capital investment to Maximize value and and financial flexibility maintain, transition and shareholder returns grow our energy portfolio EXCESS CASH FLOW 1. Maintain strong credit profile: Baa2 investmen
Slide 27: Outlook
Outlook Damien Nicks – Managing Director and CEO Hallett Wind Farms, South Australia [DAMIEN NICKS] Thanks Gary. 23
Slide 28: Market conditions and forward curves
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 $150 $140 • Through adopting a prudent risk management $130 a
Slide 29: FY24 guidance
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 wholesale electricity pricing, reflected in pricing outcomes and
Slide 30: Appendix
APPENDIX NZ = ag Join the change 26
Slide 31: FY23 financial summary table
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 Invested* 3.3% 1.0pp *Adjusted to exclude impairmen
Slide 32: Statutory to Underlying NPAT reconciliation
$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 provision (33) (46) 13 Wellington North Solar Farm (15) - (15)
Slide 33: Underlying NPAT movements: market and operational
Market / External Operational / Structural $m (post-tax) AGL Energy FY23 Full-Year Result | 10 August 2023 29 29
Slide 34: Generation by asset and type
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 wind 791 929 (15)% NSW s
Slide 35: Customer services by state
(‘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% Queensland 88 88 0%
Slide 36: 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 (28)% Queensland 1,456 1,5
Slide 37: 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% Queensland 2.5 4.3 (4
Slide 38: Generation assets, capacity and carbon intensity
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 12.75 Total coal 4,925 31.26 AGL To
Slide 39: Development pipeline
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 / 2-hour duration | 50 MW | Expected Targeted FID FY24 NSW
Slide 40: Gas supply position and new agreements
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 third-party LNG import projects as a key sour
Slide 41: 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