2021 has not been kind to the AGL Energy Limited (ASX: AGL) share price. Shares in the Aussie energy generator and retailer have fallen 39.9% lower this year and are underperforming the S&P/ASX 200 Index (ASX: XJO).
So, what's driving the Aussie energy share lower this year and what lies ahead in 2021?
Why the AGL share price is underperforming the ASX 200 this year
It may come as no surprise that the COVID-19 pandemic has been a major factor in the recent share price slump. AGL recently reported its full-year results. There was plenty for investors to unpack following the announcement.
AGL reported a 34% drop in underlying net profit to $537 million compared to FY20. That came as a result of revenue decreasing by 10% to $10.9 billion as net operating cash outflows before significant items totalled $870 million.
The AGL share price slumped following the release of the results after also slashing its full-year dividend by 23.5% to 75 cents per share.
COVID-19 impacts were felt across many segments of the Aussie energy business. AGL reported lower wholesale electricity prices and reduced electricity generation output at peak periods to name a couple.
Increasing generation supply and lower energy demand due to pandemic restrictions have weighed on earnings and the near-term outlook. The ASX 200 company also announced a demerger into two ASX-listed businesses on 30 June 2021.
The transaction, slated for completion in Q4 FY2022, will see Accel Energy focus on low-carbon energy production with AGL Australia focusing on energy trading, storage and supply. The AGL share price fell following the demerger news which was first proposed by ex-CEO Brett Redman.
Foolish takeaway
The AGL share price has been under pressure for quite some time for a number of reasons. Shares in the ASX 200 Aussie energy producer are under pressure again on Tuesday, falling 1.89% in early trade to $7.27.
