The Origin Energy Ltd (ASX: ORG) share price is in focus today following the release of the company's half-year results for FY22.
Upon opening, the company's shares have slipped 5.9% to $5.74.
Origin share price dips as losses continue through first half
- Underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) of $1,099 million, down 4.8%
- Free cash flow for the half fell 46% to $355 million
- Underlying net profit after tax (NPAT) up 18% on prior corresponding period to $268 million
- Statutory net loss after tax narrows to $131 million, up from $183 million loss
- Unfranked interim dividend of 12.5 cents per share, staying flat from HY2021
- Customer accounts up 47,000 to 4.313 million.
What else happened in the first half?
Origin had a mixed bag of events throughout the first half. However, a dominant force on the company's results was continued economic disruptions from COVID-19. In addition, the energy market is being challenged by hindered demand and tariff pressure.
Meanwhile, Origin's interest in Australia Pacific LNG (APLNG) performed solidly. During the half, APLNG achieved record revenue as commodity prices ran hot. In turn, the natural gas producer handed down a cash distribution of $555 million. However, this doesn't appear to be enough to keep the Origin Energy share price out of the red today.
Furthermore, the company's partial sale of APLNG weighed on Origin's statutory results. According to the release, the $131 million loss reflects a one-off impairment and net capital gains tax expense. The energy giant agreed to sell the 10% stake for $2.12 billion in October 2021.
Another notable item in today's announcement is Origin Energy's proposed plans to accelerate its exit from coal-fired power generation. In a separate release, Origin informed shareholders it plans to retire Eraring Power Station early in August 2025. The company intends to replace the plant with a large-scale battery.
The company said the changing energy market means traditional baseload power stations are less viable.
What did management say?
Origin CEO, Frank Calabria, commented on the results, saying:
Superior field performance and an ability to keep costs low, has put the business in a strong position to benefit from the buoyant commodities market. Australia Pacific LNG is expected to distribute more than $1.1 billion in cash to Origin for the full-year, net of oil hedging.
With regard to the company's investment in UK-based Octopus Energy, Calabria said:
More broadly, Origin's strategic investment in Octopus continues to outperform, with a tripling in the company's valuation to more than £3 billion. Octopus has now established a retail presence in seven of the world's largest deregulated energy markets and has increased its UK energy customer numbers by 2.7 million in the past 15 months.
What's next?
The future of the Origin Energy share price rests on what is next for the company. Fortunately for shareholders, Origin now expects its underlying EBITDA for FY22 to be higher than previously estimated. The latest forecast suggests EBITDA could be between $1,950 million to $2,250 million.
On the energy markets front, the company is sticking with FY22 guidance of $50 million to $600 million in underlying EBITDA. Meanwhile, the uplift is suspected to come from its integrated gas division, as oil prices remain elevated.
Finally, Origin shareholders can expect to receive their interim dividend on 25 March.
Origin share price recap
Origin Energy has been relishing higher oil prices this year. Thanks to its continued interest in APLNG, the company can capture the gains in multi-year high prices per barrel.
The Origin Energy share price is up 8.7% since the beginning of the year. This takes the company's gain to 26.7% over the last 12 months. Compared to the S&P/ASX 200 Index (ASX: XJO), this represents an outperformance of 20.7% in a one-year timeframe.
