Origin Energy Ltd has announced that its FY2016 underlying profit from continuing operations fell 41% on the previous year to AUS$354 million. The result was attributed to lower oil prices, which more than offset strong operational performance from Origin’s Energy Markets business and maiden LNG production by Australia Pacific LNG (APLNG).
Statutory loss from total operations was AUS$589 million, which was a 10% improvement on the previous year.
Origin Chairman, Gordon Cairns, said: “While acknowledging both a statutory loss and a reduction in underlying profit, Origin has made significant progress in the past year to build resilience to lower oil prices through asset sales, cost reduction, improving cash flow and the equity raising. These actions have resulted in a significant reduction in debt and the company is well placed to exceed its target to reduce debt to below AUS$9 billion by end FY2017.
“At an operational level, Origin has performed well. The Energy Markets business has significantly increased cash from operating and investing activities and improved operational outcomes across many key indicators of performance.
“Our Integrated Gas business has achieved a very important milestone with the commencement of LNG production from APLNG’s first train […] We expect Train 2 to commence production in Q2 FY2017. This transition from development through to production in FY2016 and FY2017 will see the company benefit significantly from its investment in APLNG through earnings and returns from FY2018 and beyond.”
Origin Managing Director, Grant King, added: “A major milestone was the commencement of LNG sales by APLNG in January 2016. Production has ramped up quickly to above design nameplate capacity and to date, APLNG has shipped 36 cargoes, primarily to its two major customers, Sinopec and Kansai.
“The maiden EBITDA contribution from the commencement of LNG production by APLNG has in part offset the impact of lower oil prices on the Integrated Gas business which decreased by AUS$112 million to AUS$386 million.
“The 2016 financial year has seen some major changes in the global energy industry with lower oil prices, new LNG projects coming into production and the adoption of carbon reduction targets on a global basis […] The energy resources that will benefit most from these trends are natural gas and renewables. Origin’s strategy of investing in gas and renewables sees the company well placed to lead this transition in local markets through its Energy Markets business and in regional markets through its investment in APLNG and its growing LNG production.”
In FY2017, Origin expects a 45 – 60% increase in Underlying EBITDA when compared to FY2016 Underlying EBITDA from continuing operations.
Edited from press release by Callum O'Reilly
Read the article online at: https://www.lngindustry.com/liquefaction/18082016/origin-energy-profits-fall-2923/