Origin affirms expectations of FY earnings lift

The group has reiterated expectations on higher full-year earnings and lower debt.

Origin Energy says it is on track to deliver its twin targets of an increase in full-year earnings and a reduction in debt.

Australia’s largest gas and power retailer on Wednesday reaffirmed guidance of increasing earnings by between 45 and 60 per cent in the 2017 financial year. It also confirmed its target to cut net debt to “well below $9 billion” by the end of fiscal 2017.

“As a result of the resilience of our Energy Markets business and the optimistic outlook for our Integrated Gas business, we are comfortable to reconfirm previous guidance,” chairman Gordon Cairns told shareholders at the company’s annual general meeting.

The company in August posted underlying earnings of $1.64bn. It posted a full-year loss of $589 million, as weak oil prices and a heavy debt burden from its Australia Pacific LNG development weighed for a second year in a row. Origin has been hit hard by a slide in oil prices, which came towards the completion of its $26bn APLNG project in Queensland, stretching the company’s balance sheet.

The company last year was forced to raise $2.5bn through an equity raising, cut about 2,500 jobs, slash capital expenditure and pledge to sell non- core assets worth $800m in an effort to shore up its balance sheet.

Origin now expects its expanding LNG business to drive earnings growth. Increasing shipments from APLNG will help to more than double underlying earnings for the company’s intergrated gas business to over $1 billion this financial year, Mr Cairns said.

Origin also expects to increase underlying earnings for its energy markets business by $100m to $200m this fiscal, on the back of cost reductions, he added.

The company did not provide guidance for net profit, citing possible variation in non-cash items amid the transition of the APLNG facility from development to operation phase.

At 1103 AEDT, Origin shares were down 0.71 per cent at $5.63 each.

AAP