REPORTING SEASON: Origin Energy (ORG)
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Figure 1: Origin Energy 12 month chart
Australia’s largest integrated energy company, Origin Energy (ORG) issued a slightly worse than expected half year underlying profit of $381m.
The warmer start to winter, continued discounting to attract customers, a drop in energy consumption and ongoing competition held earnings back.
The need to discount to maintain market share is expected to have cost ORG around $55m, the warmer weather wiped out ~$30m while a fall in volumes cut profit by more than $50m.
ORG operates in five divisions – Energy Markets (provides household electricity and gas), Exploration, LNG, Contact Energy (NZ’s second biggest electricity generator, which ORG has a 53% stake in) and a Corporate division.
The biggest drag on profit was a 6% revenue slump in its Energy Markets unit. While its LNG business is yet to contribute to earnings, Origin’s APLNG stgelopment (QLD natural gas/coal seam project) is estimated to start production by mid-2015 and is more than half complete.
The market expects a boost to earnings once production begins.
Once again, ORG remains tight lipped regarding guidance and has not provided profit forecasts for the full year.
A $0.25 per share unfranked interim dividend was announced and will be paid to eligible investors on the 4th April.
Investors pushed ORG shares down in reaction to the result.