AGL (ASX:AGL) share price gains 3% as chair acknowledges 'very disappointing year'

The AGL share price is in the green despite the company's bosses acknowledging financial year 2021 was less than succesful.

| More on:
a business person sits at a boardroom table with a sad and apologetic look on his face with empty chairs around him and papers on the desk in front of him.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

AGL Energy Limited's (ASX: AGL) stock is gaining today despite the company's chair stating its share price's recent performance is "not acceptable".  

AGL's chair Peter Botten made the comments at the company's annual general meeting (AGM) today. There, he acknowledged financial year 2021 was "extremely challenging" for AGL and "very disappointing" for its shareholders.

On a more positive note, the board managed to avoid a spill as more than 75% of shareholders voted in favour of AGL's remuneration resolution.

Botten put the company's poor performance down to low wholesale electricity prices and increasing demand for decarbonisation.

Despite the chair's unenthusiastic address, the company's share price is in the green.

At the time of writing, the AGL share price is $5.71, 3.53% higher than its previous close.

Let's take a closer look at AGL's AGM.

Here's what happened at AGL's AGM

The AGL share price has climbed following the boss's acknowledgment of its poor performance.

Over the course of financial year 2021, the AGL share price fell a massive 59%.

According to the company's chair, the company's struggles have resulted from operating and market headwinds.

Such challenges were supposedly identified by the company years before. However, their impact was miscalculated before being worsened by COVID-19 and mild weather.

Additionally, Botton stated the transition to decarbonisation hit the AGL share price hard as the company's position as Australia's largest carbon emitter weighed on the market.

As a result, AGL is planning to "lean harder" towards renewable energy.

Botton also reconfirmed the company's outlook for the current financial year. It expects to see earnings of between $220 million and $340 million – a "material reduction" on that of financial year 2021.

The company's CEO Graham Hunt outlined the company's plans to change the running of its coal-fired power plants.

Hunt stated AGL will be creating more of its coal-fired power when demand is at its highest. This will allow for more downtime.

It also plans to undergo its much-anticipated demerger in the new year.

Botton noted the support for a motion to force the company to provide emissions reductions in line with the Paris Agreement. However, the motion didn't manage to get to a vote.

Because of the demand, Botton reiterated AGL will provide emissions reduction targets before the demerger occurs, saying:

The success and speed of the transition [towards decarbonisation] will require an effective level of coordination between government, regulators and industry and the board does not believe it is in the best interests of AGL to make this commitment unilaterally.

The task is to create a glide path rather than a crash landing.

AGL share price snapshot

The AGL share price hasn't rebounded from its dramatic drop in financial year 2021.

It is still 52% lower than it was at the start of 2021. It has also fallen 20% over the last month.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Energy Shares

Multiracial happy young people stacking hands outside - University students hugging in college campus - Youth community concept with guys and girls standing together supporting each other.
Energy Shares

Which ASX 200 uranium stock is surging on huge news

Let's see why investors are bidding this stock higher today.

Read more »

Oil rig worker standing with a clipboard.
Economy

What does the changing oil price mean for the ASX 200?

Oil continues to wobble with the tensions seen on the world stage.

Read more »

Australian notes and coins symbolising dividends.
Energy Shares

Tempted by the big dividend yields on ASX energy shares? Here's why you should think again

The income from these stocks might not be as good as it seems.

Read more »

A man looking at his laptop and thinking.
Energy Shares

Up 100% since April, why is this ASX 300 uranium stock plunging today?

The ASX 300 uranium miner has come under heavy selling pressure on Thursday. But why?

Read more »

Excited couple celebrating success while looking at smartphone.
Energy Shares

Paladin Energy share price races higher on big announcement

Let's see why this uranium producer's shares are charging higher today.

Read more »

Oil worker using a smartphone in front of an oil rig.
Share Market News

ASX 200 up strongly while energy shares plummet on ceasefire news

ASX 200 energy shares are tumbling with Karoon Energy and Woodside Energy the biggest fallers.

Read more »

An oil worker assesses productivity at an oil rig as ASX 200 energy shares continue to rise.
Share Market News

ASX 200 energy shares lead for the second week as world awaits US decision on Iran

ASX energy shares lifted 5.31% while the ASX 200 fell 0.49% amid the US President contemplating strikes.

Read more »

Copal miner standing in front of coal.
Energy Shares

What happened to Coronado Global Resources shares on Friday?

The ASX coal miner announced new funding this week.

Read more »