Origin energy surged on ASX amid strong financials and recent developments.

  • Feb 21, 2019 AEDT
  • Team Kalkine
Origin energy surged on ASX amid strong financials and recent developments.

Origin Energy Limited (ASX: ORG) has announced its Half year results for the period ended 31st December 2018 (HY2019). The company posted an increase of underlying profit by 53%. The underlying profit was reported at $592 million, up by 53% when compared to the half-year result of 2018 (HY2018).

As per the company's presentation, the higher underlying profits were marked by high commodity prices and reduced interest margin due to debt reduction. The underlying EBITDA was reported at $1,727 million, up by 20% from $1,435 million reported in HY2018.

The total revenue for the company from continuing and discontinued operations was up by 2% and reported at $7,660 million as compared to $7,491 million in HY2018. The total profit from continuing operations was reported at $797 million as compared to a loss of $135 million in HY2018 from continuing operations and a loss of $71 million from discontinued operations, leading to a total loss of $206 million. The underlying profit of $592 million was reported after adjusting non-controlling interest of $1 million. The statutory profit for HY2019 was reported at $769 million as compared to $136 million in HY2018.

The Net Cash from operating and investing activities surged 115% from $351 million to $754 million. The total cash from operating activities was reported at $553 million as compared to $417 million in HY2018. The major chunk in the operational cash was from energy markets with a total cash inflow of $802 million as compared to $604 million in HY2018.

The adjusted Net Debt reduced by 23% and reported at $6,058 million as compared to $7,887 million reported in HY2018. The company board also decided to pay a fully franked dividend of 10 cents per share.

Operational Updates:

The company marked a steady output at Eraring (New South Wales) despite an 11-week maintenance outage at one unit. The company marked a decrease in natural gas sales in gas-fired energy generation market as compared to HY2018. However, it also marked an increase of sales in the business wholesale market as compared to 2018.

The energy position remained stable due to steady production from Eraring. A reduction of 1TWh in the gas-fired generation was noticed as it shifts to firming role for renewable energy. The company marked an increase in contracted renewables as 306 MW of low-cost PPAs came online.

AP LNG production remained stable in HY18 as compared to HY19 and the average realised price of domestic gas prices (A$/GJ) increased to 5.20 in HY19 as compared to 4.13 in HY18. The average realised price (US$/mmbtu) on AP LNG also increased from 7.23 in HY18 to 10.13 in HY19.

The Cost per well (A$m/well) and operating cost (A$/GJ) remained on target as per the company's announcement.

FY19 Outlook:

Origin expects higher Underlying profit as compared to FY2018 and further debt reduction provided that the market conditions do not change materially, and the regulatory and political environment do not adversely impact operations.

Prior to the half-year financial results announcement, the company made a lot of developments as well.

Share price movement:

The share price of ORG is moving in an uptrend from its Day’s Low of A$6.030 (made on 24th December 2018) and made a Day’s High of A$7.750 (on 19th February 2019) from where the share price took a correction till A$7.470 and rose. The share is currently hovering around A$7.680.

During the writing of this report, the share closed at A$7.670 (as on 21st February 2019, 04: 17 PM), up by 0.992% from its previous close with an average volume of 6,126,591.


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