AGL’s Growth Hinges on Cost Cuts and Battery Investments Amid Market Shifts

Solid Half-Year Performance Despite Market Volatility

AGL Energy Limited has delivered a resilient first half for the 2026 financial year, reporting an underlying EBITDA of $1.092 billion, essentially flat compared to the previous corresponding period. Underlying net profit after tax (NPAT) declined by 6% to $353 million, impacted by higher depreciation and finance costs linked to ongoing investments in asset flexibility and growth.

The company’s operational performance showed marked improvements, with fleet availability rising to 80.1% and battery earnings increasing by $10 million to $35 million EBITDA. These gains helped offset the subdued market volatility driven by milder weather and reduced transmission constraints, which typically provide opportunities for higher earnings.

Customer Growth and Margin Expansion

AGL’s customer base expanded by 108,000 services, buoyed by the acquisition of Ampol Energy’s customer book and growth in telecommunications and Netflix services. Customer satisfaction improved to 83.8%, alongside a 10% increase in consumer margin, reflecting a strategic focus on balancing customer value with financial performance in a competitive market.

The company maintained a strong churn spread of 5.3 percentage points below the market average, underscoring effective customer retention strategies. AGL’s digital app continues to lead the market, enhancing customer engagement and loyalty.

Strategic Progress and Capital Recycling

AGL announced the divestment of a 19.9% equity interest in Tilt Renewables for $750 million, expected to complete by the third quarter of FY26. Proceeds will be reinvested into flexible, dispatchable capacity projects and provide balance sheet flexibility. The company also revealed a strategic partnership with Aussie Broadband, involving the sale of its telecommunications business and a long-term collaboration to deliver bundled energy and telco services under the AGL brand.

On the renewable front, AGL’s development pipeline has grown to 11.3 GW, including significant wind and battery projects such as the Palmer and Waddi Wind Farms and the Tomago and Liddell Batteries. Construction is underway on key battery projects, with the Liddell Battery expected to be fully operational by the fourth quarter of FY26.

Financial Guidance and Cost Management

Reflecting the strong first half, AGL narrowed its FY26 guidance ranges, now targeting underlying EBITDA between $2.02 billion and $2.18 billion and NPAT between $580 million and $680 million. The company is also targeting $50 million in sustainable net operating cost reductions for FY27, driven by productivity initiatives and disciplined cost management.

AGL declared a fully franked interim dividend of 24 cents per share, consistent with its payout policy. The company remains largely hedged for FY27, although current forward electricity prices do not yet reflect the positive long-term demand outlook driven by electrification, electric vehicle adoption, and data centre growth.

Positioned for the Energy Transition

AGL’s portfolio is well positioned to capitalise on the evolving National Electricity Market, with a growing flexible asset fleet that continues to attract premiums above average market prices. The company is actively innovating in residential battery adoption and virtual power plant orchestration, supporting the transition to a lower emissions future.

Record peak demand in 2025, particularly during winter, and long-term growth forecasts underpin AGL’s confidence in its strategic direction. The company’s investments in renewable and firming assets, alongside its customer-centric initiatives, aim to deliver sustainable value as the energy landscape transforms.