AGL Energy Limited · ASX:AGL
AGL Energy — Macquarie Australia Conference 2013
24 slides from AGL Energy's conference presentation, May 2, 2013
Slide 1: ASX & Media Release: Market Update
AGL Energy Limited Level 22, 101 Miller Street Locked Bag 1837 T: +61 2 9921 2999 ABN: 74 115 061 375 North Sydney, NSW 2060 St Leonards NSW 2065 F: +61 2 9921 2552 AUSTRALIA AUSTRALIA www.agl.com.au ASX & Media Release Market Update 2 May 2013 Later today, AGL’s Managing Director, Michael Fraser wi
Slide 2: Macquarie Australia Conference
Macquarie Australia Conference Michael Fraser, CEO & Managing Director | 2 May 2013
Slide 3: Disclaimer and important information
2 Disclaimer and important information The information in this presentation: › Is not an offer or recommendation to purchase or subscribe for securities in AGL Energy Limited or to retain any securities currently held. › Does not take into account the potential and current individual investment obje
Slide 4: Recent Highlights
Recent Highlights 3 Solid profit growth and strong cash flow › 1H FY13 Underlying Profit up 20% to $279.4 million » Underlying Operating Cash Flow before interest and tax up $492.4 million » Merchant Operating EBIT up +82% › Loy Yang A acquisition successfully integrated › NSW represents AGL’s large
Slide 5: Integrated Strategy
Integrated Strategy 4 Delivering growth and diversity of earnings Energy Production Retail Markets ENERGY PRODUCTION Status Status core › 5,825 MW of operating RENEWABLE › 2.1 million electricity GAS THERMAL capacity including customers 1,720 MW of renewable PRODUCTION GENERATION GENERATION generati
Slide 6: Integrated strategy: Loy Yang acquisition
Integrated strategy 5 Loy Yang acquisition: Low cost generator providing scale benefits › Improved coverage of retail load with owned and controlled generation › Secured highly competitive fuel source against backdrop of rising energy costs › Significantly increases AGL’s owned and operated generati
Slide 7: Merchant Energy: Generation portfolio
Merchant Energy: Generation portfolio 6 Large and diverse generation portfolio developed over a decade AGL Electricity Generation Portfolio NEM Capacity by Participant 6,000 7,000 Installed Generation Capacity (MW) 6,000 5,000 NEM Capacity (MW) 5,000 4,000 4,000 3,000 3,000 2,000 2,000 1,000 1,000 -
Slide 8: Macarthur wind farm
Macarthur wind farm 7 $1 billion project delivered on time and on budget › Largest wind farm in southern hemisphere at 420 MW » 140 Vestas 112 - 3.0 MW wind turbines » Located 290km west of Melbourne » Capacity factor 35% › 50:50 joint venture with Meridian Energy » 25-year PPA gives AGL access to a
Slide 9: Renewable Energy Target: LGCs
Renewable Energy Target: LGCs 8 › LGC market continues to be over-banked LRET Market until 2015/2016 › 2012 review of RET resulted in no changes to the target › Next review due by end of 2014 › Under the current scheme to avoid shortfall the market requires: » ~950 MW of new renewable generation by
Slide 10: Retail Energy: Customer base
Retail Energy: Customer base 9 Strong market positions progressively built across NEM › Customer growth achieved via a combination AGL customer numbers (million) of acquisition and organic growth 3.5 3.0 » Organic growth strategy has provided 2.5 greater shareholder returns than 2.0 participation in
Slide 11: Retail Energy: Churn volumes unprecedented
Retail Energy: Churn volumes unprecedented 10 Victoria and NSW competition intense and discount driven › AGL withdraws from doorknocking » AGL remains focused on protecting brand and customer experience » Potential impact on customer acquisition in 2H › Competition intensifies in Q4 › Origin underst
Slide 12: Electricity demand weakens across economy
Electricity demand weakens across economy 11 NSW leads fall in demand › NEM electricity demand weak reflecting: NSW Electricity Demand (2007-2012) » Large network/distribution price rises » Effect of GFC and high A$ on manufacturing » Solar penetration (~2,500 MW installed) › NSW shows largest deman
Slide 13: NSW generation privatisation
NSW generation privatisation 12 Surplus NSW capacity caps value of baseload generation › NSW generators significantly under-utilised Surplus NSW capacity on Record Temperature Day 18 January 2013 » Response to declining demand, benign wholesale electricity prices and no carbon compensation › Over su
Slide 14: Regulatory pricing
Regulatory pricing 13 Competition provides foundation for NSW deregulation › SA government implemented price deregulation effective 1 February 2013 » 2 year price guarantee to government will reduce Retail EBIT by $30-$35 million on a full year basis » Long term benefits for consumers and industry ›
Slide 15: Wholesale gas supply
Wholesale gas supply 14 Gas retailers collectively face drop off in contracted supply › Gladstone LNG exports increase to ~1,500 PJ/a Eastern Australia Gas Demand 3,000 » Coincides with roll off of east coast domestic 2,500 supply contracts 2,000 › LNG projects seeking ‘wedge’ gas in 2014 to 2020 1,
Slide 16: NSW gas policy reversal
NSW gas policy reversal 15 Likely asset impairment and future gas supply impacts › Book value of Camden (including the northern expansion) and Hunter gas projects of $325 million may be substantially impaired once rule changes finalised › Development of Gloucester Stage 1 not impacted by proposed po
Slide 17: NSW gas consumption
NSW gas consumption 16 Manufacturing sector at risk of gas price surge › NSW businesses face potential NSW Gas Consumption by Sector (%) significant increases in the cost of delivered gas » Assuming ability to secure gas supplies › Industries most at risk are food processing, brick, cement, chemical
Slide 18: Peak gas
Peak gas 17 Future supply contracts likely to feature reduced swing gas › Load shape heavily biased to winter peak East Coast Demand Profile › Victoria’s winter peak at 1,280 TJ/day is 55% of east coast peak demand › Producers looking to reduce swing gas post 2017 as contracts roll off › Pressure on
Slide 19: Gas storage
Gas storage 18 Well progressed in developing capability to manage peak loads Silver Springs underground gas storage › First 7 years underpinned by QGC gas storage services agreement › Commenced injection August 2011 › Injection/withdrawal design capacity 30 TJ per day › Withdrawal to commence by Q2
Slide 20: Growth pipeline
Growth pipeline 19 AGL’s integrated strategy creating growth pipelines Additional renewable developments to meet RET Increased NSW gas production Bowen Basin JV Silverton Wind Farm Shareholder Value Solar Flagships QGC gas supply contract Mount Isa Power Station and gas supply contracts Newcastle ga
Slide 21: Project update - Generation
Project update - Generation 20 Solar Flagships Program › Generate energy to power over 50,000 average NSW homes › Partnership with First Solar: » Nyngan, NSW (100 MW) and Broken Hill, NSW (50 MW) » Will cover an area equivalent to 185 Sydney Cricket Grounds › Construction planned to commence mid-201
Slide 22: Outlook
Outlook 21 › FY13 Underlying NPAT is expected to be in the lower half of the guidance range of $590 million to $640 million: » Retail competition has intensified in H2 FY13 » Soft wholesale market conditions in southern markets combined with higher Queensland prices due to transmission constraints a
Slide 23: Thank you
SJAGL Thank you Q&A
Slide 24: Contact information
23 Contact information Sales - Electricity and gas www.agl.com.au Customer Service 131 245 AGL Energy Online/My AGL IQTM https://aglenergyonline.agl.com.au Corporate Information www.agl.com.au/about/Pages/Default.aspx Investors John Hobson Head of Capital Markets phone: +61 2 9921 2789 mobile: +61 (