Origin Energy Ltd has posted a 69 per cent drop in annual underlying profit, and booked impairment charges of $2.3 billion from a collapse in wholesale electricity prices.
The electricity and gas retailer said underlying profit was $318 million for the year to June 30, compared with $1.02 billion last year. Analysts had expected $275.6 million, according to Refinitiv IBES data.
Origin Energy has slumped to a loss of $2.29 billion for 2020-21 due to heavy write-downs and given guidance for the coming year that JPMorgan says is weaker than consensus forecasts.
Related article: AGL Energy announces profit drop of 33.5%
Shares in Origin dipped in early trading and were down 1.8 per cent at $4.29 by late morning.
Chief executive Frank Calabria described the operating conditions as “challenging” during 2020-21.
“Energy markets headwinds are expected to persist into FY2022, though this should be largely offset by the strong performance of our integrated gas business,” Mr Calabria said.
Origin declared an unfranked final dividend of 7.5 cents per share, down from 10 cents a year ago.
According to the Financial Review, Origin already gave guidance late last month for 2022 and 2023 earnings for its energy markets business, with the estimates falling short of investor expectations at the time. The guidance points to a decline in gross earnings of between 39 and 55 per cent this year in energy markets, followed by a modest rebound in 2022-23.
Related article: Origin slashes value of Australia’s biggest coal-fired plant
APLNG should have stable production this coming year thanks to “strong” field performance, and a breakeven oil price for cash distributions of between $US20 and $US25 a barrel, Origin said. It estimates cash flows from the project at more than $1 billion for 2021-22 net of hedging, assuming a realised oil price of $US68 a barrel.
Macquarie Equities was more positive about the outlook for the stock and reiterated its “outperform” rating, the Financial Review reported.
“We believe the worst is over for investors around energy markets, with the reset of earnings in FY22 and the outlook into FY23 improving as highlighted by AGL and re-iterated by Origin,” Macquarie said.
