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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.

 

You can see all of CommSec’s reporting season analysis by clicking here.

Steven Daghlian, Market Analyst,