Australian Origin Energy Expects Jump in Earnings

Australian Origin Energy sees a 45 to 60% increase in underlying earnings in fiscal year 2016-17 (July 1-June 30) when compared with FY2015-2016 and expects its debt to drop below the target of A$9bn (US$6.9bn). At the end of FY2015-2016 adjusted net debt decreased by A$4bn to A$9.1bn.

Reduction in debt came primarily from the sale of New Zealand entity Contact Energy, contributing A$2.9bn; the A$2.5bn equity raising; and cash flow from the business contributing A$1.3 billion. During the year Origin also reduced the number of employees by 24% and announced asset sales of A$484mn to date, and continues to target in excess of $800mn, chairman Gordon Cairns told shareholders at the company's annual general meeting October 19.

In FY 2015-2016, company's underlying earnings stood at A$1.64bn while it made a statutory loss of A$589mn, as low energy prices and debt from its APLNG project weighed on the performance for the second year in a row.

The company, however, expects APLNG to drive significant growth in earnings and returns as the project completes the transition from development to production. Earlier this month, APLNG produced the maiden LNG cargo from the second of its two 4.5mn mt/yr production trains. APLNG has shipped 47 LNG cargoes to customers in Asia and further afield since exports from its first train commenced in January this year.

“Origin’s strategy of investing in gas and renewables sees the company well placed to lead the transition to less carbon intensive energy not only domestically through the energy markets business but also in regional markets through investment in Australia Pacific LNG and its growing LNG production,” Cairns said.

Shardul Sharma

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