AGL +11.75: AGL shares jumped to their highest level in more than two years after delivering a steady 1H result in subdued wholesale conditions and announcing the sale of its telecommunications business to Aussie Broadband (ABB). The market had been cautious into the print, selling the stocks down in recent months, but today’s result should alleviate those concerns.
1H26 Highlights
- Underlying EBITDA: $1.09bn (-0.5% y/y) – above consensus of $1.02bn
- Underlying profit: $353m (-6.4% y/y) – above expectations
- Interim dividend: 24c (vs 23c y/y)
Revenue was broadly flat, while earnings dipped modestly as lower market volatility weighed on realised pricing. Importantly, higher fleet availability and strong battery performance offset much of that headwind, highlighting improved operational reliability across the portfolio. Citi described the outcome as evidence of “earnings quality and resilience,” particularly within AGL’s flexible thermal fleet, a key differentiator as volatility moderates. We’d have to agree.
FY26 guidance was tightened and increased at the mid-point, implying a 6% beat to consensus for the FY, so we’ll see earnings upgrades flow off the back of todays result. The narrowed range – albeit still wide – suggests improved visibility rather than caution, reinforcing that earnings remain robust despite calmer wholesale markets.
AGL will divest its telecommunications customer book to ABB for ~$115m in equity, sharpening its strategic focus on energy and the transition. CEO Damien Nicks framed the move as simplification, exiting non-core operations while retaining brand exposure for customers.
The company is also targeting $50m in sustainable net operating cost reductions by FY27, further supporting margins.
Overall, AGL continues to reposition itself as a more reliable, cash-generative energy major with growing exposure to batteries and portfolio optimisation. Strong free cash flow, stable earnings and a higher interim dividend reinforce that the business is transitioning from volatility-driven earnings to more operationally anchored returns. We liked the result, and remain holders of the stock.
MM remains long & bullish AGL in the Income Portfolio
Add To Hit List
