Origin is back in black, but shareholders miss out
Origin Energy has returned to profit thanks to the rise in wholesale electricity prices and LNG demand, but shareholders will still have to wait before they can hope for a dividend.
The energy company said on Thursday it made a net profit of $283 million in the year to June 30, having posted a stunning $2.05 billion loss in the previous year. This was despite a $533 million write-down of its Ironbark CSG assets and its divested Lattice Energy subsidiary.
Net cash flows jumped 92 per cent, from $1.27 million to $2.65 billion, driven mainly by high wholesale electricity prices and the performance of Origin’s Queensland based Australia Pacific LNG project.
In July, APLNG saw record gas production levels, lifting Origin’s oil and gas revenues to an all-time high June quarter. Revenue at the project rose to $570.2 million in the quarter ending June 30, up from $464.4 million the previous year.
Origin chief executive Frank Calabria declared the company was now back on track: “We had a strong performance across the board this year, with earnings growth in both gas and energy markets driving increased underlying EBITDA [earnings before interest, tax, depreciation and amortisation] and underlying profit,” he said.
Origin said it also met its "target to materially reduce debt", paying down $1.6 billion on the back of the Lattice Energy and Acumen sales, with adjusted net debt now sitting at just below $6.5 billion.
The group’s total revenue rose from $14.12 billion last year to $14.88 billion for FY18.
Origin wasn't the only electricity provider to benefit from the rise in wholesale prices: Its major rivals AGL and EnergyAustralia recorded 28 and 197 per cent increases in profits, respectively.
Still, Chairman Gordon Cairns said the company was still not in a position to pay shareholders a dividend.
“Having materially reduced debt and lifted business performance, Origin is now in a much stronger financial position and more resilient to commodity cycles,” Mr Cairns said. “However, as we have not yet reached our target capital structure the board has determined to pay a final dividend.
He flagged the company's medium-term outlook meant shareholders could start seeing payouts again next year.
Origin's share price has been on a gradual recovery since October last year, when it had hit a low of $6.80, spiking up to $10.27 earlier this year. The stock closed at $9.71 on Wednesday.