The Origin Energy Ltd (ASX: ORG) share price is taking a fall today.
Shares in the S&P/ASX 200 Index (ASX: XJO) energy provider closed yesterday trading for $10.60. In morning trade on Thursday, shares are changing hands for $9.55 apiece, down 9.9%.
For some context, the ASX 200 is up 0.4% at this same time.
This underperformance comes following the release of Origin's full-year financial results for the 12 months ending 30 June (FY 2024).
Read on for the highlights.
Origin Energy share price drops despite profit boost
- Statutory profit of $1.40 billion, up 32% from FY 2023
- Underlying profit of $1.18 billion, up 58% year on year
- Underling earnings before interest, taxes, depreciation and amortisation (EBITDA) of $3.53 billion, up 13.6% from FY 2023
- Final dividend of 27.5 cents per share, fully franked, up 37.5% from last year's final dividend
What else happened in FY 2024?
The Origin Energy share price is diving today despite the 58% year-on-year increase in underlying profits. Underlying profits were $436 million higher than in FY 2023, driven by an uplift in earnings in the Origin's Energy Markets and Integrated Gas businesses.
Over the 12 months, Origin received cash distributions from Australia Pacific LNG of $1.38 billion. Net of its oil hedging, cash distributions were $1.37 billion.
Adjusted free cash flow came in at $1.296 billion, up from $965 million last financial year. Management attributed the boost in cash flow to higher earnings from Energy Markets, though this was partially offset by a lower distribution from Australia Pacific LNG amid lower commodity prices.
However, investors look to be pressuring the ASX 200 energy stock today amid a gloomier outlook for FY 2025.
We'll look at that outlook below.
But first…
What did management say?
Commenting on the strong FY 2024 results that have failed to lift the Origin Energy share price today, CEO Frank Calabria said:
Origin's operational and financial performance highlights the benefits of the company's diverse portfolio, with higher earnings from Energy Markets and LNG trading more than offsetting lower earnings from Australia Pacific LNG and Octopus Energy.
Origin's balance sheet remains strong, with good cash generation supporting an increase in returns to shareholders and enabling capital to be reinvested into renewables and storage as we accelerate execution of our strategy.
Addressing cost of living pressures and energy costs, Calabria added:
An important factor in helping to keep downward pressure on prices is ensuring reliable energy, and it is pleasing to see how well our generation fleet performed.
Output from Eraring Power Station rose by 2.1 TWh to 14.3 TWh, with Origin's fleet of gas peaking power stations also increasing output as they helped firm increasing variability of supply in the grid.
On the sustainable energy front, he said the company "made several strategic storage investments, building a portfolio of 1.5 GW of owned and tolled battery systems".
What's next?
The Origin Energy share price looks to be taking a hit from lower earnings expectations for the year ahead.
According to Calabria:
The outlook for FY 2025 is for Energy Markets EBITDA to be lower than FY24, with electricity profit expected to decrease as tariffs reprice to reflect lower wholesale costs and retail margins, and on higher coal procurement costs.
Origin expects Energy Markets underlying EBITDA in FY 2025 in the range of $1.10 billion to $1.40 billion.
On the plus side of the ledger, management expects the Octopus Energy FY 2025 underlying EBITDA contribution to grow from $100 million to $200 million, up from $55 million in FY 2024.
Origin Energy share price snapshot
With today's intraday losses factored in, the Origin Energy share price remains up 14% in 2024.
