Australia's AGL Energy soars after hiking earnings forecast on summer demand
Hikes FY24 underlying NPAT forecast by about 8%
Shares rise up to 7.2%, hit over 5-month high
AGL to announce FY results on Aug. 14
Rewrites through, updates with further details and background, adds share moves and analyst reaction
By Sameer Manekar and Rishav Chatterjee
May 7 (Reuters) -Top Australian power producer AGL Energy AGL.AX upgraded its full-year earnings estimates on Tuesday on the back of strong summer demand and operating performance, sending its shares to a more than five-month high.
Consumer demand for power increased during the summer in New South Wales and Queensland, benefiting Melbourne-based AGL which is a key electricity retailer in the two states.
AGL shares jumped as much as 7.2% to A$9.99, their highest since Nov. 24, 2023, and emerged as the third biggest gainer on the benchmark index .AXJO, which was trading 0.5% higher.
"The business is bouncing back from operational issues last year and taking advantage of higher gas prices," said Kyle Rodda, a senior financial market analyst at Capital.com.
AGL now expects annual underlying net profit after tax (NPAT) between A$760 million ($503.27 million) and A$810 million, significantly higher than the A$281 million recorded a year earlier.
"AGL's recent upgrade in earnings guidance definitely turns heads and will likely spark optimism among stakeholders," said Ben Williamson, co-founder and co-CEO at InvestorHub.
The Melbourne-based firm, in which clean energy advocate Mike Cannon-Brookes has the largest stake, had earlier forecast underlying annual NPAT between A$680 million and A$780 million.
"It's been a tepid 12 months for AGL investors, so this should add to hopes that the business is at an inflection point, especially given its strong market position, tailwinds for gas markets, and fewer governance issues," said Rodda.
AGL also hiked its estimate for underlying operating earnings to between A$2.12 billion and A$2.20 billion, the midpoint of which is about 3% higher than the midpoint of its prior forecast range.
The utilities firm, which sells retail power to a sixth of Australians, is set to report its earnings for the year ended June on Aug. 14.
($1 = 1.5101 Australian dollars)
Reporting by Sameer Manekar and Rishav Chatterjee in Bengaluru; Editing by Krishna Chandra Eluri and Subhranshu Sahu
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