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Date : 19/09/2022

AGL Energy ASX: AGL Share Price Drop As They Announce Board Changes

Today was a big day for AGL Energy (ASX: AGL). The company announced its FY22 financial results for the year ended 30th June 2022 and its upcoming changes to the AGL Board and Management teams. However, since November 2021, AGL shares have not only found a floor but traded with renewed energy.

AGL shares have endured a torrid run since 2020. Since the pandemic-induced crash in February 2020, AGL share price has tumbled and bottomed in November 2021 at around $5.2 an AGL share. AGL shares returned about -300% during this time.

At current share prices, AGL shares have returned 12% in 2022. The business performance has been under a microscope, and today, the market was disappointed as they announce the changes to its Board – resulting in AGL shares to drop about 2% at the time of writing.

agl share price trend on tradingview.com

Source: Tradingview.com

What is happening to AGL’s Board?

AGL Energy announced key changes in relation to the renewal of its Board and management as it prepares to announce the outcomes of its review of strategic direction and confirm guidance later this month.

Chairman Peter Botten AC has decided to step down from the Board, and current Board member Patricia McKenzie will replace him as Chair, effective today. Ms McKenzie is currently the Chair of NSW Ports and the Sydney Desalination Plant group companies. She was previously the Chair of Essential Energy, a director of APA Group, AEMO, Macquarie Generation and Transgrid, CEO of the Gas Market Company and a key participant in the Council of Australian Government’s National Energy Reform. Ms McKenzie was also the Chair-elect of AGL Australia.

In addition, former Chair of the Clean Energy Council and adviser to the AEMC and AEMO on the energy transition, Miles George, will join the Board from today as an Independent Non-Executive Director. This appointment follows an externally facilitated search for a director experienced in renewable energy project delivery.

Mr George is the third new Director appointed in the last 12 months, joining ESG and energy transition specialist Vanessa Sullivan and long-term international energy executive, Graham Cockroft. In line with the changes above, Non-Executive Director Diane Smith-Gander AO has brought forward her resignation date to today.

Managing Director and Chief Executive Officer Graeme Hunt will finish his role on 30th September 2022. At that point, Chief Financial Officer Damien Nicks will take up the role of interim Chief Executive Officer. Finance and energy executive Gary Brown will act as Interim Chief Financial Officer.

AGL added that their process for appointing a new CEO is continuing as planned, and there is currently a short list of Australian and global candidates.

 

ASX AGL Share Price: FY22 Financial Performance

Along with the board changes, AGL also announced its FY22 results. The highlights were:

  • Statutory Profit after tax: $860 million, including $486 million of significant items related to onerous contract provision revaluations, impairments, and costs associated with separation, restructuring and integrations, and a movement in the fair value of financial instruments of $149 million
  • Underlying EBITDA: $1,218 million, down 27 percent on FY21
  • Underlying Profit after tax: $225 million, down 58 percent on FY21
  • Total AGL customer services: 4.2 million, broadly flat on FY21
  • Total generation volumes: 40,755 GWh, broadly flat on FY21
  • A final dividend of 10 cents per AGL shares (unfranked) was declared
  • The total dividend for FY22 was 26 cents per share (unfranked)

Over $150 million of targeted operating cost reductions were delivered by AGL in FY22. AGL Energy is now on track to deliver $100 million of sustaining capital expenditure reductions by the end of FY23. AGL’s development pipeline continues to progress, with the 250 MW Torrens Island grid-scale battery anticipated to be operational in the first half of 2023, FID reached on the Broken Hill battery project and approval received for the 500 MW Liddell and the 200 MW Loy Yang grid-scale batteries.

The review of strategic direction is also underway, with the initial outcomes to be presented in late September, in conjunction with an expected update on FY23 guidance. This is now the most anticipated event for AGL.

 

Outages affected AGL Energy generation once again

The AGL generation fleet had a strong performance for the year’s first three quarters. However, the combination of planned and unplanned outages across the fleet in the fourth quarter resulted in a two-percentage-point reduction in commercial availability year on year. There were three key causes of the unplanned outages – an earth fault in the Loy Yang Unit 2 generator rotor, which we expect to return to service in late September; COVID-related delays to planned outages at Bayswater; and a rise in boiler tube leaks across Liddell, Bayswater, and Loy Yang. Action is underway to address these issues and improve availability in the year ahead.

 

Final Thoughts on AGL Shares

The AGL share price has endured significant losses since 2020. The FY22 AGL shares performance is largely in line with expectations. However, the wholesale changes to the Board look to have put the market off today. Considering AGL share price is still risky given the challenging backdrop that the company is operating in. The market is also trading at high levels of volatility, and any bad news from AGL shares may be punished again.

 

AGL Shares News and Insights:

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