AGL (ASX:AGL) share price on watch following FY21 earnings

The company declared a statutory loss of $2 billion.

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The AGL Energy Limited (ASX: AGL) share price will be one to watch when trading resumes on Thursday. That’s after the company released its full-year results for FY21 this morning.

At close of trade yesterday, the AGL share price was trading at $7.60 – up 2.15%. The S&P/ASX 200 Index (ASX: XJO) ended yesterday 0.29% higher, for comparison.

Let’s take a closer look at what the energy producer reported.

AGL share price in focus with 34% drop in underlying profits

Investors will be keenly watching the AGL share price this morning after the company reported the following key results:

  • Revenue decreased 10.0% on the prior corresponding period (pcp) to $10.9 billion.
  • Underlying profits fell 33.5% to $537 million on the pcp.
  • Underlying earnings per share (EPS) dropped 31.6% to 86.2 cents.
  • Net operating cash outflow before significant items was $870 million – a 35% drop.
  • Full year dividend of 75 cents per share (41 cents interim + 35 cents final). This is down 23.5% on the pcp for a yield of 9.87% on the current AGL share price.

What happened in FY21 for AGL?

On the last day of the financial year, AGL announced plans to demerge into two businesses, both listed on the ASX. Accel Energy would focus on low-carbon energy production while AGL Australia’s remit will pertain to multiple energy products as well as energy trading, storage, and supply. The AGL share price slumped on this news.

In June, AGL announced the suspension of its special dividend program, in which it planned to pay 25% of underlying profits over the next 2 years.

Finally, there were multiple updates relating to the company’s current and proposed work sites, including Crib Point, Loy Yang, the Portland smelter, and Liddell.

What did management say?

AGL Energy managing director and CEO Graeme Hunt said:

Our FY21 result reflects a challenging year for AGL Energy as we realised the impact of lower wholesale electricity prices, reduced electricity generation output at peak periods, and the roll-off of legacy supply contracts in Wholesale Gas.

Although wholesale electricity prices have rallied in recent months, our result reflected the impact over the past two years of increasing generation supply and lower demand arising from the COVID-19 pandemic and milder weather.

What’s next for AGL?

As stated, AGL will demerge its business into two entities. It expects this process to be completed by the fourth quarter of this financial year.

AGL also says it will be “continuing” its self-proclaimed “leadership role in the energy transition”. The company is committing to publishing decarbonisation targets and climate roadmaps in the near future.

AGL share price snapshot

Over the last 12 months, the AGL share price has fallen 55.3%. Year to date, it is down 37.3%.

AGL Energy has a market capitalisation of around $4.7 billion.

Should you invest $1,000 in AGL right now?

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Motley Fool contributor Marc Sidarous 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.

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