Origin Energy’s interim profit took a number of blows from outages across its businesses in the six months to December – some own goals, others beyond its control.
The outages hit its coal and gas-fired power plants, there were new government caps on retail electricity prices and customer power use dipped over the six months, despite the hot and fiery late spring and early summer.
Earnings took a hit – down by more than 20% but despite that interim dividend was boosted by a third (one of the largest percentage increases this season) for the half to 15 cents a share from 10 cents previously.
Net earnings fell from $796 million to $599 million on a statutory basis. Stripping out one-off costs, underlying profit fell 11% to $528 million.
Origin CEO Frank Calabria said the company’s retailing division had felt the impact of “price re-regulation” with the introduction of fixed basic energy prices (known as default market offers) and lower electricity usage volumes.
The performance of its generation business was hit down by a months-long outage following a breakdown at its Mortlake gas power plant in Victoria and outages at the Eraring coal-fired plant in New South Wales. (Rival AGL had a major six-month-long outage at its Loy Yang station in Victoria)
“Our generation team worked against the clock to return a damaged unit to service at Mortlake power station in just six months, while output at Eraring was lower due to planned and unplanned outages,” Mr Calabria said.
“These one-off outages detracted from an otherwise strong operational performance.”
Origin reported a strong performance from its liquefied natural gas joint venture, Australia Pacific LNG, in Queensland. Origin’s distributions rose 32% to $520 million – which was almost all the underlying profit for the half-year.
“We reported record production and an increase in profit in integrated gas, on the back of the continued operational strength of Australia Pacific LNG,” Mr Calabria said.
The company on Thursday confirmed its full-year guidance for its energy markets business between $1.4 billion and $1.5 billion in underlying earnings.
Australia Pacific LNG is expected to make a full-year cash distribution to Origin of between $1.1 billion and $1.3 billion.
Investors liked that news and not weak results from its core power and gas business and as a result, the shares closed up 1.8% at $7.97.