• Leading integrated energy company with exposure to renewable energy investments.
• Given recent share price de-rating the stock is trading on undemanding multiples and attractive dividend yield.
• Strong cash flow business which provided flexibility to deploy cash in growth opportunities and capital management.
• On-going focus on costs and digitalisation should support margins.
• Ready for growth opportunities with a solid balance sheet.
• Potential capital management initiatives (buyback)

• Competitive pressures leading to margin erosion.
• Increase in supply leading depressed prices.
• Regulatory risk (policy uncertainty).
• Un-scheduled shutdowns impacting earnings.

(1) Underlying profit of $1.02bn was ahead of consensus estimate of $995.1m. (2) Net income of $1.59bn came in ahead of market estimate of $1.12bn. (3) Revenue of $12.82bn was slightly below estimates of $12.98bn. (4) Gross margin was up +18% to $3.8bn, driven by wholesale prices and higher per unit wholesale gas revenue offsetting higher gas supply costs. (5) Outlook commentary disappointed the market, with the Company forecasting FY19 underlying profit of $970–1,070m versus pre-results release market estimates of $1.1bn. (6) The Company will make a final decision on Crib Point LNG import terminal in FY19. (7) AGL will provide $50m hardship debt relief and extension of discounts for loyal customers to all states.

• FY19 guidance.Management expects FY19 underlying profit to be $970 – 1,070m in FY19, the midpoint of which represents mostly flat NPAT growth on FY18. Management noted that the guidance reflects benefits from the business optimisation program mostly offsetting slower momentum in wholesale markets and increasing competitive pressures in Customer Markets. The Company expects Wholesale Markets earnings to peak this year, as electricity market prices start to decline. Increased competitive pressures will impact margins in Customer Markets.