* AGL sees FY2020 underlying profit down 17%-25%
* Profit outlook around 10% below analysts' forecasts
* AGL still hunting for acquisitions (Adds CEO, analyst comments)
By Sonali Paul
MELBOURNE, Aug 8 (Reuters) - Australia's top power producer, AGL Energy AGL.AX , warned on Thursday its profit could fall as much as 25% in fiscal 2020 as it copes with an outage at one of its plants, weaker wholesale and retail power prices and higher coal and gas costs.
While the company has flagged the headwinds for some time, the forecast decline was worse than investors had expected, sending AGL's shares down as much as 6% in a broader market .AXJO that was up slightly.
Wholesale power prices are weakening as more cheap wind and solar power comes on stream and are unlikely to climb back to the highs of the past few years, Chief Executive Brett Redman said.
"We're arriving at the future faster than some of the analysts were forecasting," Redman told Reuters in an interview.
AGL reported a better-than-expected annual underlying profit of A$1.04 billion ($704 million) for the year to June 30, up 2% on a year earlier, helped by higher wholesale power prices and near record output from its power plants.
But it expects underlying profit of between A$780 million and A$860 million in the current year, well below analysts' expectations of around A$908 million, according to Refinitiv data.
"We expected earnings contraction was not being fully appreciated by the market, and this view has only been strengthened with this result," Citi analysts said in a note.
Despite the weaker outlook for 2020, AGL announced a share buyback worth about A$650 million and said it remained well-positioned to invest A$2 billion over the next few years in pumped hydro, gas-fired power and battery projects.
AGL, cashed up after years of rising wholesale power prices, has been looking for acquisitions to boost growth but scrapped a A$3 billion bid for telecoms firm Vocus Group VOC.AX in June after deciding the price wasn't right.
Redman said the company, Australia's no.2 energy retailer, is still looking for ways to bring data and energy together.
Meanwhile, on Thursday it said it would buy an 80% stake in retailer Perth Energy from New Zealand's Infratil IFT.NZ for A$55 million to expand in Western Australia.
AGL still fared better than the owner of rival EnergyAustralia, Hong Kong CLP Holdings 0002.HK , which this week reported a 31% fall in first half operating earnings due partly to what it called "very challenging conditions in Australia". will be hurt this year by a seven-month outage of a unit at its Loy Yang A power station, cutting earnings by up to A$100 million.
On the retail front, AGL and its rivals were forced by the government this year to slash prices for households and businesses. ($1 = 1.4769 Australian dollars)