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

sdf

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

Excited couple celebrating success while looking at smartphone.
Energy Shares

This ASX 200 uranium stock is charging higher on big news

This uranium producer is delivering the goods. Let's see what it announced.

Read more »

A man looking at his laptop and thinking.
Energy Shares

What did Macquarie make of the Santos takeover offer?

Is this a good deal for shareholders? Let's find out.

Read more »

A man wearing glasses and a white t-shirt pumps his fists in the air looking excited and happy about the rising OBX share price
Energy Shares

Guess which ASX 300 mining stock is surging 11% on big news

There are a couple of reasons behind this strong gain.

Read more »

Image from either construction, mining or the oil industry of a friendly worker.
Energy Shares

3 ASX uranium stocks up more than 20% in 2 days

Paladin Energy, Boss Energy, and Deep Yellow shares are among the market's fastest risers again today.

Read more »

happy miner, happy oil and gas worker with thumb raised wearing a hard hat amid rigging
Energy Shares

Up 20% in a month, should I buy Woodside shares?

One fund manager provided their view.

Read more »

An oil worker in front of a pumpjack using a tablet PC.
Energy Shares

Santos shares rocket on $30b takeover offer

This energy giant could be going private after receiving a takeover approach.

Read more »

A Santos oil and gas worker wearing a hard hat stands in a yellow field looking at blueprints with an oil rig and blue sky in the background
Share Market News

Energy shares rip amid Middle East tensions while ASX 200 surges 20% from April low

ASX energy shares roared 6.49% higher while the ASX 200 lifted 0.37% and set a new record last week.

Read more »

An oil worker in front of a pumpjack using a tablet PC.
Energy Shares

Why did ASX 200 energy shares rip up the charts on Friday?

Analysts say oil prices are on track for their best week since February 2022.

Read more »