Origin shares yesterday experienced their largest single-day fall, closing down 74c at $6.55.
The company attributed its $A332 million after-tax profit result to a full 12-month contribution from Contact Energy, in which it has a 51.5% stake, and higher earnings from its Australian energy retail business.
Revenue and other income also increased 21% to $5.95 billion, while earnings before interest, tax, depreciation and amortisation (EBITDA) were 18% higher at $1.087 billion.
Origin managing director Grant King said Contact Energy benefited from higher electricity prices, as a result of low hydro inflows.
“Contact Energy has a flexible portfolio of hydro, geothermal and gas-fired power generation assets and is a net generator of electricity,” he said.
“This has allowed it to benefit from high electricity prices and increase its thermal generation output when hydro generation has been constrained.”
Back in Australia, King said Origin’s retail business performed well despite intense competition.
“Customer churn across the natural gas and electricity retail businesses has remained at high levels, with the company winning a total of over 325,000 new accounts to record a net increase of over 22,000 customer accounts.
“Despite the increase in costs associated with this activity, the company has improved its EBIT-to-sales margins for natural gas and electricity from 7.2% to 7.8%. The LPG business increased sales volumes and margins despite rising international prices.”
Looking at the company’s upstream activities, King said high oil prices were unable to offset the company’s reduced oil and condensate production, while higher operating expenses and significantly higher exploration write-offs meant exploration and production EBITDA was 11% lower than the prior year.
But King said the coming year should see a turnaround in these results, with production expected to increase from 78 to 100 petajoules equivalent per annum.
“Australian operations are expected to deliver significant growth in EBITDA from the continuing development of coal seam gas assets and contributions from the BassGas and Otway Gas projects,” he said.
“It is expected that these assets will help grow EBITDA from Australian operations by around 15%.”
Meanwhile, he said Contact Energy would be operating in a more challenging environment.
“The assumption that hydro inflows, and consequently electricity prices, are likely to return to more average levels, will mean that EBITDA from Contact Energy may be lower in the coming year,” he said.
“Contact Energy will face a significant escalation in gas costs over the next few years, which will tend to reduce earnings as this increase is absorbed.”
