By David Winning

SYDNEY--AGL Energy narrowed its annual earnings guidance citing a strong first-half performance driven by consumer margins, tight cost control and lower-than-expected depreciation.

AGL said it now expects to achieve underlying earnings before interest, tax, depreciation and amortization of between 2.02 billion Australian dollars (US$1.43 billion) and A$2.18 billion in the 12 months through June. That was a tighter range than prior guidance for A$1.92 billion-A$2.22 billion provided to investors as recently as early October.

AGL also narrowed its forecast for annual underlying net profit to between A$580 million and A$680 million, from a previous target of A$500 million-A$700 million. A year ago, the company achieved an underlying net profit, which strips out one-off items, of A$640 million.

"As expected, earnings are skewed to the first half in line with typical seasonality of customer gas and electricity demand, and the gradual roll-off of lower-priced legacy gas supply contracts," AGL said on Wednesday.

The revised outlook was provided to investors alongside a statutory net profit of A$94 million for the six months through December, down 42% from A$162 million a year ago.

"The principal drivers of the decrease were negative movements in the fair value of financial instruments and lower underlying profit after tax primarily driven by lower Trading & Origination--Electricity gross margin, higher depreciation and higher net financing costs," AGL said of its statutory profit.

Underlying profit, which strips out one-off items, totaled A$353 million in the six-month period, down 6% from A$377 million a year ago. Revenue fell by 0.9% to A$7.04 billion.

Directors of AGL declared an interim dividend of 24.0 cents a share, up from 23.0 cents a year ago. AGL's dividend policy is to pay out 50-75% of underlying profit after tax.

AGL is in the middle of a multi-year overhaul of its portfolio of assets as it seeks to recycle capital that it can then invest in the energy transition. The company has brought into operation batteries in Torrens Island and Broken Hill and it has begun building a A$750 million battery at the site of its closed Liddell coal-fired power plant. It also aims to build a 500 megawatt grid-scale battery at Tomago in eastern Australia's Hunter region, with a view to bringing it online in late 2027.

"The improved availability and flexibility of our generation asset portfolio, including the continued strong performance of our batteries, helped mitigate a period of low price volatility in the National Energy Market, which was driven by milder weather, and lower transmission constraints," said Chief Executive Damien Nicks.

While generation at AGL's Bayswater and Loy Yang A coal-fired power stations was slightly lower in a period when AGL carried out planned major outages, the company benefited from higher wind and hydro availability.

AGL said it is targeting some A$50 million of net operating cost cuts, which will fully benefit its results from the 2027 fiscal year.

Write to David Winning at david.winning@wsj.com

(END) Dow Jones Newswires

February 10, 2026 16:48 ET (21:48 GMT)

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