AGL Energy Full-Year Profit Falls 44% on Hedging Loss

By Angela Macdonald-Smith

Aug. 20 (Bloomberg) -- AGL Energy Ltd., Australia's biggest electricity and gas retailer, said full-year profit fell 44 percent, after a decline in the value of hedging contracts on power prices and foreign exchange rates.

Net income slid to A$229 million ($200 million) in the year ended June 30, from A$410.5 million, the Sydney-based company said today in a statement. Profit excluding one-time items and changes in the value of derivative contracts rose 7.6 percent to A$355.5 million, compared with the mean estimate of A$352.1 million in a Bloomberg survey of 10 analysts.

AGL in October appointed Michael Fraser as chief executive officer to replace Paul Anthony, who was ousted following a cut in the utility's profit forecast. The power supplier has reduced debt by A$697 million since December through asset sales and said today it expects to complete the divestment of petroleum interests in Papua New Guinea by the year-end.

``The AGL business is in good shape,'' Fraser said in the statement, sent to the Australian stock exchange. ``Our balance sheet is stronger and gives us the flexibility to pursue disciplined growth from a number of identified opportunities.''

AGL yesterday fell 2 percent to A$13.92 in Sydney trading.

AGL reiterated a forecast for 2009 underlying profit of between A$360 million and A$390 million. The 2008 profit was in line with the company's reduced forecast of between A$330 million and A$360 million.

Sales rose 50 percent to A$5.65 billion. AGL declared a final dividend of 27 cents. Net income included a loss of A$184.6 million from a decline in the value of derivative contracts, AGL said.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net