Origin Energy posts another annual loss due to impairment – Update

By David Winning

SYDNEY – Origin Energy Ltd. posted another full-year net loss due to a large impairment charge, but said it expects the continued strong performance of the Australia Pacific LNG project to boost underlying earnings over the course of the year. fiscal year 2023.

Origin posted a net loss of A$1.43 billion ($992 million) in the 12 months to June 2022, compared to a loss of A$2.28 billion a year ago. The result included an impairment of A$2.2 billion.

Underlying earnings before interest, tax, depreciation and amortization rose 3.8% to A$2.11 billion. This was widely expected after Origin said in late May that it expected underlying Ebitda around the midpoint of the initial guidance of AU$1.95 billion to AU$2.25 billion.

The company’s directors declared a final dividend of 16.5 cents per share, compared to a payout of 7.5 cents per share at the corresponding stage in fiscal 2021.

Origin’s full-year result shows the advantage of its broad portfolio of energy assets, which offers a point of difference to main competitor AGL Energy Ltd. and allows it to cushion the setbacks of one division if the other is performing well.

Global oil and natural gas prices jumped earlier this year after Russia’s invasion of Ukraine heightened energy security concerns. The price increase benefited the APLNG project, which was able to accelerate sales of spot cargoes of liquefied natural gas. APLNG sold five LNG spot cargoes between April and June, representing one-third of all spot sales in fiscal year 2022.

Origin’s cash distributions from APLNG totaled nearly A$1.6 billion in fiscal year 2022.

Still, exporters are under pressure to redirect more natural gas to the domestic market amid warnings of a large deficit next year, which could limit their ability to sell LNG cargoes on the spot market. if energy prices remain high. Origin said last month that it was already helping to secure domestic gas supply, up 4% in the last three months of the period.

“Overall, I am pleased with how the business has weathered a myriad of challenges ranging from high raw material prices and volatile wholesale energy prices, to fuel supply shortages and multiple weather events, while being able to generate higher underlying earnings and strong cash flow,” said Chief Executive Frank Calabria.

Origin said underlying Ebitda from its energy markets business was A$365 million, well below A$991 million a year ago. Management had flagged a weak result in early June when it said initial guidance of A$450-600m was too high and that an underlying Ebitda of A$310-460m was more likely.

Origin has struggled to supply enough coal to its Eraring power station in eastern Australia, experiencing supply shortages from Centennial Coal’s Mandalong mine. Without enough coal, Origin cannot operate the Eraring plant at full capacity and has been forced to seek more thermal coal on the spot market at a time of high fuel prices. This weighed on the division’s earnings in fiscal 2022.

The company has since made progress in tying up more supply. “We have now entered into contracts for 4.4 million tonnes of coal supply,” representing the majority of the company’s needs for fiscal year 2023, Calabria said.

On Thursday, Origin did not reinstate earnings guidance for its Energy Markets division for fiscal 2023 after it withdrew its initial guidance of underlying EBITDA of between A$600 million and A$850 million in early June due to the financial crisis. coal supply.

Still, Origin said underlying profit is expected to rise in fiscal 2023, driven by profit growth from its gas business, while gross power profit is expected to remain suppressed.

“The risk of under-delivery of coal remains, particularly due to rail and mine performance,” the company said in its regulatory filing. “Origin will continue to assess the company’s outlook with a view to providing an update when there is less uncertainty.”

Write to David Winning at [email protected]

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