Origin Energy Limited has released its 2023 full-year results ending 30 June 2023, reporting that its statutory profit climbed to $1,055 million from a deficit of $1,492 million in the previous year.
Origin reported an increase in underlying profit to $747 million, $340 million higher than the previous year, owing to higher earnings in Energy Markets, Octopus Energy, and Integrated Gas offset in part by higher income tax expense associated with unfranked distributions from Australia Pacific LNG, and underlying EBITDA increased to $3,107 million.
Origin earned $1,783 million in cash dividends from Australia Pacific LNG due to higher realised oil prices. Additionally, the company received cash distributions of $1,489 million after deducting oil hedging.
“The outlook for FY2024 is for further growth in Energy Markets Underlying EBITDA, with Australia Pacific LNG production expected to rebound and cash flow remaining strong. Looking further ahead to FY2025, we expect electricity gross profit in Energy Markets to be lower than FY2024,” Origin CEO Frank Calabria said.
Adjusted free cash flow was $965 million, a $97 million decline from the previous year, as increased earnings from Energy Markets and increased cash dividends from Australia Pacific LNG were more than offset by higher working capital in Energy Markets.
Calabria said the operational performance was strong this year, with higher earnings contributions from Energy Markets, Integrated Gas, and Octopus Energy in the UK.
“Australia Pacific LNG delivered record revenue and cash distributions to Origin as it benefited from elevated commodity prices, while continuing to meet the gas needs of export customers and as one of the largest suppliers to the east coast domestic market,” Calabria stated.
“In Energy Markets, electricity earnings improved as higher wholesale costs from previous periods were recovered through electricity tariffs and coal supply costs declined following the introduction of the coal price cap. Higher sales revenue and trading benefits also contributed to higher earnings in the natural gas segment,” he continued.
He also reported increased customer support due to cost-of-living challenges and higher energy prices. According to him, Origin aims to allocate $45 million this year to assist customers in hardship, an increase from the $30 million provided last year.
Additionally, he said Origin has completed the migration of all electricity and gas customers to Kraken, aiming to provide superior service at lower costs.
“Origin Zero is tracking against its ambition to supply more business customers with a wider range of cleaner energy solutions, announcing a landmark alliance with a leading grocery retailer, to co-invest in, and share benefits from, the installation of solar at 100 supermarkets, as well as batteries and demand management. These devices will be connected to Origin’s virtual power plant, Origin Loop, which has continued to scale rapidly and now has 276,000 connected services and a capacity of 815 MW,” Calabria said.
He stated, “In FY2023, there has been a step change in earnings from Octopus Energy in the UK, in which Origin has a 20 per cent stake, as it continued to leverage its superior customer experience and trust, and low-cost operating model and market-leading Kraken platform. Having completed the acquisition of Bulb Energy, Octopus is now the second-largest energy retailer in the UK, continues to grow licensing of Kraken, while pursuing a range of growth options in the UK and other markets.”
He added that Origin is executing its strategy to accelerate renewables and storage in its portfolio, with strong business performance enabling various investment decisions.
“We have approved the first phase of the Eraring battery, acquired the Warrane prospective wind development site in the New England REZ and progressed several renewable and brownfield battery development options across the portfolio,” he continued.
The Board determined a fully franked dividend of 20 cents per share, which Origin Chairman Scott Perkins said reflects the strength of the recovery in the company’s performance and its confidence in the future.
“Execution of Origin’s strategy is gaining momentum and we are confident that our customer base, portfolio of assets and management team position the company advantageously as the energy transition progresses,” Perkins stated.
He reported that the proposed acquisition of Origin by a consortium comprising Brookfield Asset Management and MidOcean Energy is proceeding through the necessary regulatory steps.
“The scheme and the Board’s recommendation is subject to an independent expert concluding the scheme is in the best interests of shareholders. The independent expert process is underway,” he noted.
“While the timing of the shareholder vote is uncertain as it relates to the timing of regulatory approvals, Origin and the Consortium are moving expeditiously towards the target to implement the scheme by early in the 2024 calendar year,” he added.
