Warmer winter hits AGL, Origin Utilities Flat earnings forecast

Unseasonably warm weather and the lingering effects of intense competition will weigh on the earnings of two of the country's largest energy utilities - AGL and Origin Energy - in the year ahead, with both forecasting flat earnings.

Unseasonably warm weather and the lingering effects of intense competition will weigh on the earnings of two of the country's largest energy utilities - AGL and Origin Energy - in the year ahead, with both forecasting flat earnings.

For the year to June 2014, AGL said its underlying net profit would be in the range of $560 million to $610 million. In the year to June 2013, the underlying net profit was $585.4 million.

Origin said it had stemmed the loss of market share that occurred last year and that, while competition pressures were abating, the bottom line impact would not be felt until towards the end of the present year.

Rather, it pointed shareholders to the strong growth in earnings and cash flow expected in fiscal 2015-17 as its new export gas project comes on stream.

Both companies suffered from unusually warm weather from late winter into spring, which AGL estimated will wipe up to $30 million off underlying earnings. Origin put the impact as high as $40 million.

Origin failed to give any earnings guidance, saying that despite the improving trend on some fronts, the lingering effects of the heavy discounting in retail energy margins would drag on earnings for most of the year.

AGL is expected to bid for electricity generation assets for sale in NSW, perhaps units of Macquarie Generation, although any move will be subject to scrutiny by the Australian Competition and Consumer Commission.

Any purchase will provide earnings with another leg-up, although it is likely to be accompanied by a fund-raising.

Origin also said it had extended the contract of managing director Grant King, which had been due to end in mid-2014.

It comes amid work to complete construction of the group's export gas project in Queensland, which will not see its first gas flow until 2015.

It also follows the retirement of the company's long-standing chairman, Kevin McCann.

Related Articles