Here’s what hurt Origin Energy’s (ASX:ORG) FY21 numbers

Highlights

  • Origin Energy Limited (ASX:ORG) has recorded a hefty full-year loss of AU$2.29 billion in FY21.
  • Power sector companies have been under pressure because of the supply of cheap electricity in the market through renewable sources.
  • Origin has declared an unfranked final dividend of 7.5 cents per share, taking total dividends for FY2021 to 20 cents per share.

Stocks of Origin Energy Limited (ASX:ORG) slumped nearly 2.4% during the intraday session on Thursday (12:46 PM AEST) to trade at AU$4.265 a share, following the announcement of the FY21 results for the year ended on 30 June 2021.

The Sydney-based company has recorded a hefty full-year loss of AU$2.29 billion as the impacts of the COVID-19 pandemic and a surge in the utilisation of renewable energy dented the company's earnings across the business.

Related Article: Why Origin Energy (ASX:ORG) share price fell 9% today

Origin and other leading power utilities have been facing huge pressure due to cheap electricity supply from large wind and solar farms. The cheap renewable electricity supply has caused the wholesale electricity prices to plummet to a level, which gas and coal-fired power generators can't compete with. The massive loss comes after the country's top gas and power supplier outlined an impairment of AU$2.25 billion against some of its generation assets and deferred tax liability.

Must Read: Origin Energy (ASX:ORG) makes a loss of A$2,291 million

Financial Highlights:

FY21 for the Origin was characterised by lower energy demands and COVID-19 impact on prices of key commodities, including oil, natural gas and electricity. The company has posted a huge decline of 69% in its underlying profit for the financial year, which came in at AU$318 million, with the energy market impacted by lower wholesale prices.

  • The loss in underlying profits was partially offset by lower operating costs in Australia Pacific LNG (APLNG), oil hedging gains, retail cost-saving and lower interest expense.
  • Origin managed to have a robust Free Cash Flow of AU$1,140 million during the financial year, primarily due to high cash conversion in Energy Market due to lower working capital requirements.
  • The company has reduced its debt by AU$519 million during the financial year, primarily due to lower capital expenditure, interest rates and tax payments.

Related Article: Does Origin Energy pay dividends?

The performance summary is as follows:

Operational Highlights:

The operational performance of Origin in both electricity and LNG businesses could not meet expectations due to COVID-19 led disruptions, lower operating cash flow and lower cash distribution from APLNG.

  • Earnings (Underlying EBITDA) at the company’s energy market business slumped to AU$991 million, a 32% decline relative to the previous year, primarily due to lower wholesale prices and higher metering costs.
  • At the same time, earnings(Underlying EBITDA) from ORG’s integrated gas business tumbled to AU$1.135 billion, a 35% decline relative to FY20. The reduction in earnings is mainly attributed to lower realised LNG prices and lower distribution from APLNG.

Must Read: Origin Energy (ASX:ORG) Uplifts Gas Production Guidance for FY21

Outlook

The company has provided guidance for FY22 based on market conditions, and regulatory environments.

Dividend

The company's management has declared an unfranked final dividend of 7.5 cents per share, taking total dividend for FY2021 to 20 cents per share.

Source: Copyright © 2021 Kalkine Media

The final dividend has a pay date of 1 October 2021, with an ex-dividend date of 7 September 2021.

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