REPORTING SEASON: Origin Energy Limited (ORG)
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Figure 1: Origin Energy Limited 12 month chart
Origin Energy (ORG) Full year result muted – but when is winter coming?
· Australian based energy provider, Origin Energy (ORG) reported its full year 2014 numbers today. The result was below market expectations – which had already been pared back.
· The result once again highlights the challenging retail energy market at present. The industry has been hit by conservative retail customer usage thanks to warmer weather and energy conservation and tough competition causing margin squeeze and loss of market share.
· Origin’s Earnings before Income Tax (EBIT) came in below market expectations, driven by very weak energy markets and higher depreciation costs. Expenses over FY14 fell slightly and Origin saw positive change in working capital from improved billing and collections.
· Investors will like the fact that origin has decided not do an equity raising for its Browse acquisition, choosing a hybrid issue instead. ORG will structure the hybrid in order to ensure that it receives equity credit from the rating agencies.
· Origin gave no formal guidance today but did say it expects an increased contribution from its energy markets business in FY15, helped by lower competition and increased gas margins. Origin’s $24.7Billion Australia Pacific LNG (APLNG) project due to begin its first LNG in mid-2015.
· Origin will pay a 2H dividend of $0.25 payable on the 26th of September 2014