Origin Energy Full Year Result: ORG records $2.2b loss but underlying results tick the boxes

CommSec

Online Stockbroker

Origin Energy has reported a full year loss of $2,226 million in 2017. The main feature of the result was the impairment charge of more than $3 billion against the carry value of its assets reflecting weaker energy prices. 

The impairments announced in the first half of the year totalled $1,893 million and were largely consisting of $1.03 billion reflecting the portion of the Australia Pacific LNG (APLNG) business which ORG owns and a $578 million marking down in the value of the Browse Basin assets. There were further write downs in the second half of the year totalling $1,172 million, including a further $815 million in relation to APLNG and the value of Lattice Energy which came to $357 million. Removing the impairment and other adjustments, the underlying profit of $550 million was a little better than the estimate that most analysts had forecast. 

Underlying earnings, before interest tax, tax depreciation, depreciation & amortisation (EBITDA) increased $834 million or 49% to $2.53 billion, helped by better performances from the electricity and gas business, and the increased contribution from LNG earnings after APLNG production increased by 46%. 

ORG’s net debt decreased by $1 billion to $8.1 billion driven by $900 million in proceeds from asset sales and $1.3 billion of operating cash flows, which also funded $500 million in capital expenditure, $200 million of net contributions to APLNG and $5 million of interest payments. 

The Energy Markets business reported a 12% increase in EBITDA, equating to a rise of $162 million to $1,492 million. This primarily driven by growth in Electricity segment’s gross profit which, which rose 11% - influenced by volume growth and improving returns in generation in an environment of rising wholesale prices. A modest increase in Natural Gas gross profit reflected a balance between higher sales volumes and a lower realised oil price. Looking ahead, ORG expects Energy Markets to post underlying EBITDA for FY2018 to be in the range of $1.7 billion to $1.8 billion, representing a 14 to 21 per cent increase on FY2017 

One of the key area’s the group is focussed on is debt reduction. As a result, debt was the main consideration in ORG’s decision not to pay a dividend in the second half of the financial year. ORG says it will review each dividend decision against “prevailing circumstances’. The group expects that a combination of asset sales and improved cash flow will result in total debt falling below $7 billion by the end of FY18 from around $8 billion presently. 

 

For more Reporting Season coverage, please visit (VIEW LINK)


1 stock mentioned

CommSec
CommSec
Online Stockbroker
Online Stockbroker

CommSec is Australia's leading online broker. CommSec has been committed to providing the best in online trading since 1995. CommSec helps make informed investment decisions with comprehensive market research, free live pricing and powerful...

Expertise

No areas of expertise

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.

Comments

Sign In or Join Free to comment