Power bills are up and AGL smashes its half-year profit

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AGL posted a 91% rise in profit to $622 million for the half-year to December on better prices for wholesale electricity.

The company says the result reflects strong margin growth in wholesale sales which offset a small fall in retail margins and planned increases in operating expenditure.

Revenue was up 7% to $6.45 billion. Underlying profit after tax was up 27% to $493 million.

AGL, Australia’s largest electricity generator, declared an interim dividend of 54 cents a share, 80% franked, an increase of 32% or 13 cents a share.

Managing director CEO Andy Vesey says AGL is looking at the impact of bigger power bills on its customers.

“We are doing what we can to address the impact on customers of high market prices for energy through our emphasis on fairness, simplicity and transparency,” he says.

“For example, in recent months we applied automatic loyalty discounts for customers on standing offers in some states and launched AGL Essentials — a guaranteed low-rate, digital -only product — and we are soon to launch AGL Pre-Paid, a product designed to provide peace of mind to customers.

“Amid a competitive market and ongoing transition in our sector, AGL is delivering value for customers and shareholders.”

Average residential power bills increased by 44% in real terms over the past decade, according to the consumer watchdog, the ACCC.

AGL’s gross margin was $1.845 billion, up 13.1%, mainly due to the wholesale market benefiting from higher wholesale electricity prices and higher gas revenue more than offsetting higher gas supply costs.

The company expects underlying profit after tax in the financial year to June to be in the range of $940 million to $1.04 billion.

“This guidance reflects expectations of continued margin growth in the Wholesale Markets business offsetting current margin and cost pressures in Customer Markets,” the company says.

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