AGL Energy

By Dan Stratful

Thursday 27th October 2011

AGL Energy (ASX: AGK) is Australia's leading renewable energy company and is the country’s largest private owner, operator and developer of renewable generation assets.

AGK has investments in hydro and wind and developments in solar, geothermal, biomass and landfill gas. AGK has retail, merchant energy and upstream gas businesses and the company’s origins go back to 1837 when it supplied gas for the first public street lighting in Sydney. AGK was the second company to list on the ASX.

AGK may be just the thing for challenging equity markets, with its defensive appeal as an integrated energy company. Similar to Contact Energy, AGK has also been experiencing unfavorable weather conditions which have impacted its financial results for the year to 30 June 2011. On an underlying basis net profit of $431 million was up only slightly on last year’s $429 million profit and the result would have been better if it were not for an unusual set of weather events which happened across eastern and southern Australia in late January and early February 2011.

The extreme weather events including the Queensland floods and Cyclone Yasi led to a period of high wholesale electricity prices, which then significantly increased the costs of meeting customers’ demand for electricity. This resulted in AGK informing the market that underlying profit for the year would be between $30 million to $35 million lower than previously advised.

While 2011 was a challenging year for AGK, the company is optimistic about its future and is confident that it will see profitable growth in the current financial year ending 30 June 2012, driven by a pipeline of development projects.

AGK today announced that it expects underlying earnings in the financial year to June 30, 2012, to be in a range of A$470 million-A$500 million, an increase on the A$431 million underlying earnings that AGL reported in the previous financial year.

Investment Research Group (IRG) views the shares as a GROWTH BUY.

AGK shares today traded at $14.41.

For sharemarket and fixed income trading enquires contact:
Dan Stratful at Investment Research Group (IRG)
Authorised Financial Adviser (AFA)
0800 437 8489, 09 304 0232, dan.stratful@irg.co.nz
**A disclosure statement is available, on request and free of charge.

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