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?
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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.
