Analysis of financial performance: AGL Energy Limited and Genesis Energy Limited

This report intends to highlight on the recent financial performance of the two popular electricity companies, AGL Energy Limited and Genesis Energy Limited. For the analysis purpose, key financial items from the financial statements of the firms and financial ratios have been considered. Based on the analysis, it has been found that in terms of actual figure, AGL Energy Limited remains in healthier position than Genesis Energy Limited. However, in terms of growth in profitability and other important financial ratios, Genesis Energy Limited has shown healthier prospect. Hence, considering the risk factor and future growth, the investors are required to invest in Genesis Energy Limited.
1.0 Brief introduction of companies
AGL Energy Limited is a publicly-listed Australian company that offers energy products and services to the Australian economy. The firm is engaged in both the generation of electricity and retailing of electricity to cater the demand of both residential and industrial customers (AGL, 2015a). The company has started its operation as Australian Gas Light Company in 1837 and came up as AGL Energy Limited in 2006 (AGL, 2015a). The company mainly generates power electricity by utilising thermal, wind and hydroelectricity power. Apart from that, it also uses natural gas and coal seam gas as the source. According to the figure of 2014, AGL Energy Limited has more than 3.8 million suburban and corporate customers from Victoria, New South Wales and Queensland (AGL, 2015a). Apart from huge investments in the supply of electricity and gas, the company is also considered as the largest private owner, operator and developer of renewable energy sources of Australia.
Genesis Energy Limited is a New Zealand based publicly traded electricity company that is engaged in generation of power and LPG retailing (Genesis Energy, 2015b). The company has been founded on 1999 and is presently considered as the largest electricity and natural gas retailer of New Zealand. The company has recorded a market share of 42% in the financial year 2014 (Genesis Energy, 2015b). In 2014, the company has generated 14% electricity of New Zealand and in terms of the capacity (in MW) it is treated as the third largest electricity company of New Zealand.In this report, the recent financial trends of both AGL Energy Limited and Genesis Energy Limited has been analysed with the help of financial statements and ratio analysis.
2.0 Analysis of financial position
Financial statements of the companies are the indicator of the current financial health of the company (Edmister, 2013). In addition, with the help of financial statements such as profit and loss account, balance sheet and cash flow, the investors can assume the future projection of the firm. On the other hand, ratio analysis enables the financial analysts to predict the risk factor involved in the particular firm.
2.1 Recent trends in the items of financial statements
In terms of the revenue, AGL Energy Limited has almost 20% higher income compared to that of Genesis Energy Limited. It can be inferred that diversified sources of generating power and large scale of operation can be considered as one of the major factor that has enabled AGL Energy to secure much higher revenue than Genesis Energy. However, most significantly, both the firms have experienced a positive growth in revenues. AGL Energy has recorded a growth of 2.23% in revenues in 2015 (AGL, 2015b). On the other hand, Genesis Energy has also experienced the growth of 2.09% in total revenues during the discussed time period.


Analysis of financial performance: AGL Energy Limited and Genesis Energy Limited

Type: Report
Domain: Financial Performance Analysis
Words: 1500
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