Origin Energy has flagged cuts to spending in its retail business as well as exploration and production as it slumped to a $25 million half year loss.
While the loss was related to the fall in the Australian dollar, non-cash charges and interest expenses, its underlying profit also dropped nine per cent to $346 million.
A near $100 million decline in pre-tax earnings from the exploration and production business to $65 million weighed on the result.
That will drop even more in the second half as lower prices increasingly bite.
Profits in its energy markets business, in which it sells electricity and gas wholesale and retail, increased by 25 per cent to $466 million, as margins and prices for customers have risen.
While Origin is Australia’s biggest electricity and gas retailer, its investment in the $24.7 billion Australia Pacific LNG project is aimed at transforming the company and dramatically increasing earnings through gas exports.
That was still the case, although the massive fall in oil prices – which gas prices are linked to – means previous expectations of a $1 billion step-up in cashflow from 2017 are being modified.
APLNG was on track for its first production train or unit to be completed in mid-2015.
“Directors are mindful that during this final phase of investment the recent significant fall in oil price, if sustained at current levels, will result in lower growth in cash flow and earnings than previously expected,” chairman Gordon Cairns said.
“Origin has, and will, continue to ensure capital expenditure is carefully focused on projects that will enhance cash flow and earnings in the near term and that operating costs are tightly controlled.”
ORIGIN EARNINGS FALL IN TOUGH ENERGY MARKET
- Interim net loss of $25m, down from $322m net profit
- Underlying profit of $346m, down nine pct from $381m
- Revenue down four pct to $6.95b
- Interim dividend unchanged at 25 cents per share unfranked