Australia's top power producer AGL Energy <AGL.AX> reported a 20% fall in its half-year profit on Thursday, hurt by falling wholesale electricity prices and a six-month outage at one of its coal-fired plants, but the earnings were better than feared.
AGL's shares rose 4% amid a flat broader market.
The company said its full-year profit would come in at the higher end of its forecast range of A$780 million to A$860 million given in August, but that would still be down at least 17% from a year earlier.
AGL warned that it expected wholesale prices to continue to fall in financial year 2021, which starts in July, with a growing supply of cheap wind and solar power and lower coal prices weighing on markets.
"Headwinds remain as we look to FY21," said Brett Redman, AGL's chief executive officer, in a statement.
Not only is the company facing falling wholesale prices for the power it sells, but it is paying more for gas that it sells in its energy retailing business, Redman told Reuters.
AGL's underlying profit, which omits one-off items, fell to A$432 million ($291 million) from A$537 million for the six months to Dec. 31.
The profit was 11% above the market consensus, analysts at Citi said.
Australia's no. 2 energy retailer declared an interim dividend of 47 Australian cents per share, down from 55 cents per share a year ago.
AGL is considering building a battery in the Broken Hill region in outback New South Wales, where a number of renewable energy projects have run into grid congestion, which has choked their output at certain times of the day, Redman said.
A battery in the region could store energy for times in the day when wind and solar power are not available and could help stabilise the grid, Redman told analysts in a conference call.
(Reporting by Sonali Paul; Additional reporting by Soumyajit Saha in Bengaluru; Editing by Shailesh Kuber and Amy Caren Daniel)
