AGL Energy reported a steady first half with flat underlying EBITDA and a narrowed FY26 earnings outlook, while accelerating its renewable projects and forming a strategic partnership with Aussie Broadband.
- Statutory profit after tax of $94 million, underlying EBITDA flat at $1,092 million
- Narrowed FY26 guidance with underlying EBITDA between $2.02 billion and $2.18 billion
- Customer base grows to 4.7 million with improved satisfaction scores
- Development pipeline expands to 11.3 GW including new PPAs with Tilt Renewables
- Strategic divestment of 19.9% stake in Tilt Renewables for $750 million and Aussie Broadband partnership
Steady Financial Performance Amid Market Challenges
AGL Energy Limited has delivered a solid first half for the 2026 financial year, reporting a statutory profit after tax of $94 million. While this figure was weighed down by non-cash losses on financial instruments and significant transformation costs, the company’s underlying earnings remained resilient. Underlying EBITDA held steady at $1.092 billion, mirroring the previous year’s performance, though underlying net profit after tax dipped slightly by 6% to $353 million.
The company declared a fully franked interim dividend of 24 cents per share, reflecting confidence in its cash flow generation and capital management strategy. Importantly, AGL narrowed its FY26 earnings guidance, now forecasting underlying EBITDA between $2.02 billion and $2.18 billion, and underlying net profit after tax between $580 million and $680 million. This refinement signals management’s growing assurance in operational execution and cost discipline.
Operational Momentum and Customer Growth
AGL’s operational highlights underscore a business adapting well to evolving market conditions. The company expanded its customer services to 4.7 million, an increase of 108,000 from the prior year, driven by organic growth and the acquisition of Ampol Energy’s customer base. Customer satisfaction scores improved to 83.8, indicating stronger engagement and retention amid competitive pressures.
Fleet availability also improved, with a 2.6 percentage point increase to 80.1%, helping AGL optimise generation during periods of favourable market pricing despite subdued price volatility attributed to milder weather and fewer transmission constraints. The company’s Retail Transformation Program continues to progress on schedule, with key capabilities deployed and benefits tracking as planned.
Accelerating the Energy Transition
Strategically, AGL is advancing its transition towards renewable and flexible energy assets. The development pipeline has grown to 11.3 gigawatts, up from 9.6 GW at the end of FY25, reflecting a robust project pipeline. Notably, AGL signed two 15-year power purchase agreements with Tilt Renewables for the Palmer Wind Farm in South Australia and the Waddi Wind Farm in Western Australia, adding 228 MW of renewable capacity.
Construction has commenced on the 500 MW Tomago Battery in New South Wales, while the Liddell Battery is progressing with testing phases targeting partial operation by Q3 and full capacity by Q4 of FY26. Additionally, AGL secured a 40 petajoule gas supply agreement with Esso Australia, ensuring fuel supply from 2028 to support firming capacity.
Capital Management and Strategic Partnerships
In a significant capital move, AGL agreed to divest a 19.9% equity interest in Tilt Renewables for $750 million, expected to complete in Q3 FY26. Proceeds from this transaction are earmarked to fund investments in flexible, dispatchable capacity and enhance balance sheet flexibility.
Further simplifying its operations, AGL entered a strategic partnership with Aussie Broadband to divest its telecommunications business. This deal transfers approximately 400,000 telco customer services to Aussie Broadband in exchange for a 7.5% equity stake, with potential for AGL to increase its holding if customer numbers grow. The partnership aims to reduce operating costs while maintaining bundled energy and telco offerings for customers.
Looking Ahead
AGL is targeting $50 million in sustainable net operating cost reductions from FY27 onwards, reflecting ongoing efforts to improve efficiency. While the company’s earnings are seasonally weighted towards the first half due to gas and electricity demand patterns, management remains cautious about regulatory and market uncertainties that could impact performance.
Overall, AGL’s first half results and strategic initiatives position it well for the energy transition, balancing operational stability with growth in renewables and flexible capacity.
Bottom Line?
AGL’s disciplined execution and strategic partnerships set the stage for a transformative FY27 amid evolving energy markets.
Questions in the middle?
- How will the divestment of Tilt Renewables shares impact AGL’s capital allocation and project funding?
- What are the risks and opportunities associated with the Aussie Broadband partnership for AGL’s customer retention?
- How might regulatory changes or market volatility affect AGL’s narrowed FY26 guidance and renewable project timelines?