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Key Findings

AGL’s share price fall, which commenced in 2017, has wiped over 70% of AGL’s market value to date

AGL’s coal power assets now rank the company as the largest carbon polluter in Australia

The opportunity to reinvest unsustainable profits and transform AGL into Australia’s renewable energy leader was squandered

Overexposure to ageing and exceptionally high emission thermal generating assets amidst an energy market transitioning to zero emission sources is arguably at the heart of AGL’s problems

Summary

On 1 July 2021, the share price of AGL Energy (“AGL”) hit an almost double-decade low of A$8.00 after reaching record highs just four years ago. The prolonged and unrelenting share price fall, which commenced almost immediately following the departure of former CEO Andy Vesey in 2017, has wiped over 70% of AGL’s market value to date, and destroyed over A$12bn in shareholder value.

The share price fall has wiped over 70% of AGL’s market value to date, and destroyed over A$12bn in shareholder value.

Earlier this year, AGL posted a staggering A$2.7bn loss resulting from write-downs related to poor risk management on an early push into windfarms (A$1.9bn), and increases in the provisions relating to failure to adequately understand the financial costs of rehabilitating its coal plants (A$1.1bn), which arguably still remain grossly inadequate for restoring all four of AGL’s sites. 

Falls in wholesale electricity prices have undermined AGL’s profitability. However, AGL’s destruction of $12bn in shareholder value commenced well before this year’s write downs and the recent power price volatility. A decade of flawed, short-term cash driven decisions and political interference is more centrally to blame. Excessive management turnover and no consistent overall strategy aligned with the scientific consensus on climate risk has also called into question whether management and the board has really understood what business they are in.

Trista Rose

Former Analyst Trista Rose has worked for investment banks in London, New York and Sydney and was part of the proprietary trading team at Macquarie bank. Trista has degrees from the University of Queensland, University of Oxford and is now pursuing a Master’s in Sustainability at University of Sydney.

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