The Sydney-based company yesterday reported a net profit of $233 million for the six months to December 31, up from $194 million in the same period last year.
Despite reporting a 4% drop in total revenue, the company’s earnings before interest, tax, depreciation and amortisation rose 9% to $640 million.
Origin said it expected its strong underlying performance to result in an increase in year-on-year earnings for the 2007 financial year.
“Origin Energy is entering a period of significant growth,” managing director Kevin McCann said.
“This is a year of transition as the capital expenditure program on coal seam gas, BassGas and the offshore Otway is essentially completed.
“A full year contribution from these projects, together with Sun Retail, will significantly lift earnings in 2008.”
He also said the company was “well positioned” as a fuel-integrated generator/retailer and was “confidently” looking forward to continued growth in returns to shareholders.
Managing director Grant King said at the beginning of the year, the company had expressed uncertainty over a number of key issues, which could influence its full year result.
“These included the timing of the commencement of production from both the
BassGas and the Otway gas projects, the rate of decline of the Perth Basin oil fields, and the likelihood of a reduced contribution from Contact Energy after an exceptional year to June 30, 2006,” King said.
“The BassGas project is now in production and successful appraisal drilling in the
Perth Basin has reduced declining production rates.
“The Otway gas project is unlikely to contribute to this financial year.
“While the contribution by Contact Energy has decreased in line with our expectations, the underlying business is performing well.”
But he said consistent with prior years, the natural seasonality in earnings of both the retail business and Contact Energy will see second half earnings lower than the first.
“This effect may be exacerbated by movements in the mark-to-market value of electricity contracts,” King said.
“Higher levels of exploration expense may also occur in the second half as there is a higher level of seismic and drilling activity being undertaken.
“As advised around the time of the Sun Retail acquisition, a number of one-off costs associated with the acquisition will also be expensed in the second half.”
Origin last November offered to pay $1.2 billion for the acquisition of wholesale business Sun Retail from the Queensland Government, outbidding rival AGL Energy.
AGL then offered Origin a $14 billion nil-premium “merger of equals”, which the latter rejected last week.
Australia’s second-biggest electricity and gas retailer said the merger based on current market prices did not properly reflect the “fundamental value” of the two Sydney-based companies.
