AUS
NZ
UK
CA
USA
IND
The demand for electricity is strong across the continent; however, despite that, falling retail margins and default market offer is giving some trouble to the energy retailers such as Origin Energy Limited (ASX:ORG).
Few energy retailers such as AGL Energy Limited (ASX:AGL) are reporting decent earnings despite industry challenges, but in general, the operating environment is getting tough for both energy retailers and coal providers, such as Whitehaven Coal Limited (ASX:WHC), amid ACCC’s cap on retail margins and shifting demand from coal to gas & solar for energy generation, respectively.
Also Read: AGL Sails Despite Market Challenges; Says Operating Headwinds To Persist
The penetration of solar rooftops across the continent is also putting pressure on the electricity demand from the grids as well, posing another challenge for retailers despite higher energy consumption and demand across the domestic front.
To Know More, Do Read: The Future of Energy Generation in Australia; Solar to Increase Three-Fold By 2024
Origin Energy Limited (ASX:ORG)
- Financial Highlights
While the integrated Australia Pacific LNG business of the company recorded robust performance, the same could not be said for the energy retailing business. ORG reported the results for the half-year ended 31 December 2019 with a revenue of $6,728 million, down by ~12.16 per cent against the previous corresponding period (or pcp).
The net profit after tax (or NPAT) for the period fell by ~ 24.60 per cent against pcp to stand at $601 million.
ORG reported the basic earnings per share and diluted earnings per share of 34.0 cents, which remained down by ~24.94 per down against pcp, respectively.
The underlying EBITDA fell by 8 per cent against pcp to stand at $1,590 million, while the underlying profit fell by 11 per cent to stand at $528 million. Likewise, the statutory profit for the period fell by over 24.50 per cent or by $197 million against pcp to stand at $599 million.
However, the AP LNG prospect of the company delivered some strong results, reflecting record production. The underlying EBITDA for the Integrated Gas before non-cash accounting changes surged by 7 per cent against pcp.
ORG generated a free cash flow of $680 million, up by 22 per cent against pcp, and cheered the shareholders with an interim dividend of $0.15 a share (fully franked), up by $0.10 against pcp.
Source: Company’s Report
- Operational Highlights
The energy market earnings fell by 15 per cent against pcp to stand at $723 million, reflecting re-regulation on retail price (DMO), one-off unplanned generation outages at Mortlake & Eraring, and lower electricity volumes.
In the operational review section, ORG mentioned, that:
The integrated gas business of the company delivered record production of 358 petajoules during the period, which marked a 5 per cent increase as compared to 12 months ago, reflecting improved well and processing availability and the commissioning of the Eurombah Reedy Creek Interconnect pipeline in July 2019.
The prospect shipped 66 cargoes during the period and inked two new supply agreements with Orora and Orica. The Beetaloo exploration project is expected to reach the production test in the late quarter of FY20 and initial quarter of FY21. Apart from that, ORG achieved some positive results related to exploration and environmental approval during the period.
The LNG prospect could also witness strong support from the shift in the maritime fuel regulations, which is somewhat pushing the maritime industry towards low sulphur fuels and LNG.
To Know More, Do Read: IMO 2020- A Double Edge Gizmo for Woodside Petroleum and Caltex Australia
- FY2020 Guidance
ORG presented the FY20 guidance, subject to market conditions not materially changing and the regulatory and political environment not adversely impacting operations. The energy markets underlying EBITDA is expected in between $1.4 to $1.5 billion, unchanged against the previous guidance.
The production at AP LNG is also anticipated to remain unchanged and near the upper end of the guidance 690 to 710 petajoules (100 per cent share), with a targeted capital and operating expenditure of $2.5 to $2.7 billion.
The distribution breakeven is expected to reach at the lower end of the guidance range of USD 29 to USD 32 per barrel of oil equivalent, and further cash distribution to ORG from AP LNG is projected to be in the range of $1.1 to $1.3 billion for FY2020.
The stock of the company last traded at $7.950, up by 1.53 per cent against its previous close on ASX.
Whitehaven Coal Limited (ASX:WHC)
- Financial Highlights
WHC also reported figures for the half-year ended 31 December 2019. The well-know facts related to the coal industry, such as lower demand in developed nation and transition of large consumers such as Japan to nuclear energy, seems to be tugging the company.
To Know More, Do Read: Australia Diverting Coal To Emerging Asia While China’s Coal Import Policies Cracking Down on ASX Coal Stocks
The revenue for the period fell by 30 per cent against pcp to stand at $885.1 million, reflecting a lower average achieved price for H1 FY2020, which stood at $108 per tonne, down by 30.32 per cent against pcp.
The EBITDA of the company plunged by 68 per cent to stand at $177.3 million, reflecting soft realised prices, the impact on ROM production due to labour shortages, dust events at Maules Creek, and the scheduled eight week Narrabri mine longwall move. The NPAT fell by 91 per cent against pcp to stand at $27.4 million.
WHC generated cash of $122.3 million from operations, down by 74 per cent against pcp, and adding to the trouble; the unit production cost surged by 10 per cent against pcp to stand at 76 per tonne.
WHC announced an interim dividend of 1.5 cents a share (unfranked), which remained significantly below the previous distribution of 20 cents a share in HY2019.
Source: Company’s Report
- Operational Highlights
Equity Run of Mine (or ROM) coal production fell by 30 per cent against pcp to stand at 6.0 million tonnes, which hampered the EBITDA.
However, Equity coal sales remain in line with pcp at 8.5 million tonnes, and Equity own metallurgical coal sales accounted for 21 per cent of the total sales during the period, up by 2 per cent against pcp.
The snippet of the operational performance is as below:
Source: Company’s Report
- FY2020 Guidance
The managed coal production is anticipated to be in the range of 20.0 to 22.0 million tonnes, and managed coal sales are expected to be in the range of 19.0 to 20.0 million tonnes.
The unit production cost is projected to remain in the range of $73 to $75 per tonne.
The stock of the company last traded at $2.240, down by 5.0 per cent against its previous close on ASX.
