Origin Energy has posted a $207 million half-year loss due to impairments but flagged an improvement in earnings in its electricity generation and retail business.

Australia’s largest gas and power retailer’s bottom line was weighed down by $533 million in impairments on its Ironbark gas field and recently sold Lattice Energy business, which were announced to the market last week.

The result is still a dramatic improvement from its $1.56 billion loss a year ago.

Origin’s underlying profit for the six months to December more than doubled to $428 million, helped by gains in the electricity and gas businesses and a ramp up in production at the Australia Pacific LNG (APLNG) export terminal in Queensland.

Chief executive Frank Calabria said this reflected a strong operating performance.

“We are seeing positive momentum in the performance, and both our energy markets and integrated gas businesses are contributing to that,” he told reporters.

Underlying earnings from the energy markets business – which includes the electricity and gas retailing operations – rose 21 per cent to $891 million.

That was mainly driven by higher generation at it its 2,880 megawatts Eraring plant in NSW – Australia’s largest coal-fired power station – which the company has run harder to take advantage of higher wholesale prices.

Origin lost 47,000 customers in a competitive marketplace that has been plagued by higher utility bills, but Mr Calabria said the company has responded with increased sales and market and focus on affordability.

Earnings from the integrated gas business more than doubled to $630 million, helped by the ramp up at the giant APLNG terminal and improved gas prices, though was partially offset by higher tax, depreciation and amortisation of $187 million.

Despite increasing operating costs, Origin lifted its full-year guidance for its energy markets division, with underlying earnings expected to be between $1.78 billion and $1.85 billion, up from the previous range of $1.7 billion to $1.8 billion.

For the gas business, its share of APLNG production is expected to remain between 245 and 265 petajoules, but cash break-even for the project is now likely to fall to $US45 per barrel of oil equivalent, from the previously expected $US48 boe.

The news cheered investors, with Origin shares up 58 cents, or seven per cent, at $8.89 in late trade.

RBC Capital Markets analyst Ben Wilson said Origin’s financial performance hit the mark.

“We see cash conversion a little better than forecast and FY18 guidance moving in the right direction,” he said.

“We see this as a solid result and outlook as a catalyst to reverse some of Origin’s underperformance versus peers.”


* Net loss of $207m vs $.156b

* Revenue up 19pct to $7.94b

* No interim dividend, unchanged