Last year proved to be a bleak time for the AGL Energy Limited (ASX: AGL) share price. Shareholders of the energy company were confronted with a debilitating 48% fall in the value of shares in 2021.
The substantial move to the downside is atypical for a blue-chip investment with the stature of AGL Energy. It would require some unnerving news to move a company that far into the negative. Unfortunately, there were a few events throughout the year that put investors on the edge.
Let's take a closer look at three reasons the AGL share price continued to tumble in 2021.
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Off on the wrong foot for AGL share price
Shares in the energy generator and retailer ushered in last year at a price of $11.95. On 4 February, the company commenced a swift descent following news pertaining to the recognition of charges. These charges reflected provisions mainly for legacy wind farm offtake agreements.
It appears investors were not fond of AGL recognising $2,686 million (post-tax) in charges during the first half of FY2021. As a result, the AGL share price sank 18% between 5 February and 26 February. In hindsight, this set the pace for what would be a disappointing year.
Throwing a breakup into the mix
Amid growing environmental pressures, AGL made the call on 30 March to split the company into two. These separate entities were defined as 'New AGL' and 'PrimeCo'.
In addition, New AGL would be focused on the energy retailing business for Australian households. Furthermore, this de-merged company would have plans for carbon-neutral operations. Whereas, PrimeCo would be an electricity generator for the National Electricity Market.
Initially, the market reacted with positivity. However, sentiment soured as a clearer picture of the costs associated with separating the company surfaced. The split is expected to be finalised in the last quarter of FY2022.
Widening losses take a toll on AGL's dividends
By the time August came around, things weren't looking much brighter for the AGL share price. On 12 August the company reported its full-year results for FY2021.
To the disappointment of shareholders, revenues fell 10% year on year to $10.9 billion. Similarly, the bottom line felt the pinch as losses widened to $2.06 billion. For comparison, 12-month trailing earnings for the company at the end of December 2020 were $1.60 billion in losses.
The steep losses also forced management's hand to reduce dividends paid to their shareholders. In turn, AGL's full-year dividend fell 23.5% to 75 cents per share.
For reference, management attributed the undesirable result to lower wholesale electricity prices and reduced generation output.
