- Summary
- Companies
- Sees A$220 mln to A$260 mln in demerger costs
- Raises lower end of fiscal 2022 profit forecast
- Accel Energy to hold 15% stake in AGL Australia
Feb 10 (Reuters) - AGL Energy Ltd said on Thursday it had significantly progressed with plans to split into a bulk power generator and a carbon-neutral energy retailer by June 2022, and had identified 350 roles to be made redundant in the process.
The announcement sent the company's shares up 4% to A$7.82, their highest in six months.
Government pressure to cut retail rates, waning investor appetite for coal-fired power and an influx of solar and wind energy into the grid have ratcheted up pressure on AGL. The company has pinned hopes of a rebound on the split. read more
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The demerger would cost between A$220 million and A$260 million ($158-$187 million), with savings of A$250 million targeted over the next two years, it said.
Accel Energy, the entity that would hold its coal-fired power plants and wind farm contracts, would have a 15% stake in the separately listed electricity and gas retailer AGL Australia.
AGL Australia would become a net-zero energy business by 2040 and Accel Energy would close all coal-generation assets by 2045.
RBC analysts said in a note that although the restructure had "potential to deliver unrecognised value, this is not expected to be implemented for another two years".
AGL also raised the lower end of its fiscal 2022 profit forecast, narrowing the range to between A$260 million and A$340 million, from A$220 million to A$340 million.
Chief Executive Graeme Hunt said the company was well positioned to benefit from improving wholesale electricity prices seen over the past six months.
However, the slump in power prices over the past two years drove AGL to slash its interim dividend by nearly a third to 16 Australian cents per share, and report a 41% drop in profit.
The company's underlying profit, which omits one-off items, came in at A$194 million for the six months to Dec. 31, beating a Morgan Stanley estimate of A$169 million.
($1 = 1.3924 Australian dollars)
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Reporting by Arundhati Dutta in Bengaluru; Editing by Aditya Soni and Stephen Coates
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