Origin share price tumbles 6% on $1.4 billion loss

The energy producer and retailer released its FY22 results this morning.

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Key points

  • The Origin share price is tumbling 6% to trade at $5.695 following the release of the company's full year earnings
  • The energy producer and retailer posted a $1.4 billion loss and $14.4 billion of revenue for the 12 months ended 30 June
  • Origin refused to provide guidance for FY23 amid continued uncertainty 

The Origin Energy Ltd (ASX: ORG) share price is in the red after the company released its earnings for FY22.

The energy producer and retailer's share price opened 4% lower at $5.82 before plunging to trade at $5.695 right now. That marks a 6.18% fall.

Origin share price falls on $1.4 billion loss

Here are the key metrics in Origin's report:

The ASX 200 energy company moved closer to profitability in FY22, with its full-year loss mostly reflecting a $2.2 billion non-cash impairment flagged last month.

Its Energy Markets business posted $365 million of underlying EBITDA – a year over year drop. It was impacted by high commodity prices, domestic supply interruptions, volatile wholesale electricity prices, higher fuel costs, and wet weather.

Its Integrated Gas business saw a 62% improvement in underlying EBITDA, rising to $1.8 billion, while it saw a record cash distribution of $1.59 billion from Australia Pacific LNG (APLNG).

What else happened in FY22?

FY22 was a busy year for Origin and its shareholders.

The market heard the value of the company's investment in Octopus Energy had more than doubled to around $5.5 billion at the time of the September announcement. The Origin share price lifted 5% on the back of the news.

The energy giant also sold a 10% stake in APLNG for $2.1 billion and revealed its decision to dump its Eraring coal-fired power station in 2025, seven years earlier than previously planned.

Finally, the Origin share price lifted 1.4% when the company announced a $250 million on-market share buyback in March.

What did management say?

Origin CEO Frank Calabria commented on the company's FY22 performance, saying:

The value of Origin's integrated business is evident in this result, as higher commodity prices drove strong earnings from Integrated Gas, helping to offset lower earnings from Energy Markets as it grappled with an almost unparalleled year in terms of market conditions.

Overall, I'm pleased with how the business navigated a myriad of challenges from high commodity prices and volatile wholesale energy prices; to fuel supply shortages and multiple weather events, while being able to deliver higher underlying profit and strong cash flow.

What's next?

Origin didn't provide any new earnings guidance today, saying it's still uncertain about FY23.

Though, it did note it expects its underlying earnings to improve on the back of its gas business while profits in its electricity segment will likely remain suppressed.

It's still at risk of coal under-delivery due to rail and mine performances. APLNG production for FY23 is expected to be between 680 petajoules and 710 petajoules.

Looking further into the future, Origin anticipates growth in underlying earnings will continue in FY24, but the magnitude of such growth is dependent on many outside factors.

Origin share price snapshot

Today's tumble hasn't been enough to send the Origin share price into the longer-term red.

It's still trading 7% higher than it was at the start of 2022. It has also gained 31% since this time last year.

For comparison, the S&P/ASX 200 Index (ASX: XAO) has dumped 7% of its value year to date and 6% over the past 12 months.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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