Origin Reports Full Year Loss
Origin Energy Limited has reported a loss for the year that ended on June 30,2016.
The Australian company said its loss for the year stood at A$589 million, an improvement of 10% on the prior year. Underlying profit from continuing operations was A$354 million, down 41% on the previous year.
Chairman Gordon Cairns said due to continued task of debt reduction and in absence of sufficient franking credits the company has decided not pay a dividend for the second half.
“While the Board will review each dividend decision in light of the prevailing circumstances, the Board’s view is that suspension of the dividend is in the best overall interest of shareholders,” said Cairns.
In September last year, Origin stated that in order to lower debt, strengthen the balance sheet and reduce reliance on distributions from Australia Pacific LNG, it plans to reduce the company’s dividend for FY2016 and FY2017, make further reductions in capital expenditure and sell non-core assets.
Origin has also been selling some of its assets as parts of its debt reduction exercise. In May, it sold Mortlake gas pipeline in Victoria for A$245 million. The company also sold its 50% interest in OTP Geothermal Pte Ltd.
Origin is planning to reduce its debt below A$9 billion by the end of FY2017, Cairns said. “Origin has made significant progress in the past year to build resilience to lower oil prices through asset sales, cost reduction, improving cash flow and the equity raising.”
Investment in gas
Origin’s commentary on natural gas sector was extremely optimistic.
“The 2016 financial year has seen some major changes in the global energy industry with lower oil prices, new LNG projects coming into production and the adoption of carbon reduction targets on a global basis. The energy resources that will benefit most from these trends are natural gas and renewables. Origin’s strategy of investing in gas and renewables sees the company well placed to lead this transition in local markets through its energy markets business and in regional markets through its investment in APLNG and its growing LNG production,” Managing Director, Grant King said.
Origin’s Australia Pacific LNG (APLNG) dispatched its first shipment to Japan's Kansai Electric Power Company earlier this year. The company expects to benefit significantly from its investment in APLNG through earnings and returns from FY2018 and beyond as the project transitions from development through to production in FY2016 and FY2017.
APLNG’s second train is expected to commence production in Q2 FY2017.