-Solid interim result
-Competitor beat in retail
-Limited discounting a plus
-Loy Yang A robust contribution
By Eva Brocklehurst
Brokers gave AGL Energy ((AGK)) the thumbs up after the interim results. The electricity and gas utility impressed with stable earnings and margin improvement as well as customer wins.
Retail provided the best outcome for several brokers with AGL clearly in front of competitors, gaining customers and maintaining margins. AGL has stated it will cease the door knocking customer acquisition strategy in NSW and Victoria, believing a better margin outcome is obtained through re-investing in winning back customers. Credit Suisse is not so sure and will be looking to confirm the margin outcome has been maintained in the second half.
Macquarie highlighted the gross profit increase of 18% in electricity against an average price increase of 22% per megawatt hour and revenue increase of 26%. The broker notes only a limited amount of the increase was given away through discounting, despite the intense competition in the market place. The headline result for retail appeared weak but this reflected timing of carbon price billing and changes to transfer pricing. Credit Suisse expects this will be recovered with a weighting to the second half.
On the merchant side, brokers welcomed the robust contribution from AGL's recently acquired Loy Yang A power station.