The Origin Energy Ltd (ASX: ORG) share price has fallen 4.26% so far today after the energy provider released its quarterly report for the period ending June 2020.
Origin reported that the COVID-19 pandemic has impacted natural gas and electricity demand, with some customers facing financial difficulties. But Origin received record distributions from the Australia Pacific LNG joint venture (APLNG), with the joint venture delivering record production in FY20.
What does Origin Energy do?
Origin Energy operates in the electricity and gas markets. One of Australia’s largest energy retailers with approximately 4.2 million customers, it services both large energy customers and the residential market.
Origin is a key player in Australia’s energy supply chain, involved in power generation, including wind and solar technologies, as well as gas exploration and production. The company has a 47.5% interest in the APLNG joint venture, which is Australia’s largest producer of coal seam gas.
What did Origin report?
Origin received record cash distributions from the APLNG joint venture of $1,275 million in FY20. This was at the top end of guidance and up from $974 million in FY19. The joint venture delivered record production. Full year revenue, however, declined 5% with increased production offset by gas inventory movements and lower domestic prices. Its gas production in the June quarter declined 3% in response to low demand as a result of the COVID-19 pandemic.
COVID-19 has had noticeable impacts on Origin’s electricity demand. While residential demand increased following the implementation of lockdowns, business demand fell significantly. Business demand has recovered somewhat with the easing of restrictions, but remains below pre-pandemic levels. FY20 electricity volumes were down 7% across retail and business reflecting a combination of milder weather, lower SME customers, and COVID-19 impacts in the final quarter. FY20 gas volumes were down 4% due to lower business volumes.
Earlier this month, Origin announced post-tax charges which would reduce statutory profit after tax by $1,160–$1,240 million and underlying profit after tax by around $10 million would be recognised in FY20. The non-cash charges relate to revised commodity price assumptions, economic impacts of the pandemic, and the transition to a lower carbon energy supply.
What is the outlook for Origin?
CEO Frank Calabria recognised the joint venture highlights in FY20, citing its record production, high plant reliability, and reduction in capital and operating costs.
“Origin received record cash distributions from Australia Pacific LNG, demonstrating the value of this world-class asset to our business,” he commented.
The company has been focused on supporting customers facing financial difficulties, as well as minimising the impacts of the pandemic on the business. Origin reported that it has extended its commitment not to disconnect those in financial distress and to waive late payment fees until 31 October.
At the time of writing, the Origin share price is down 35.85%, year to date, and down 31% on this time last year.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
More reading
- Why AMP, FlexiGroup, Marley Spoon, & Origin shares are tumbling lower
- These shares were the ASX 200’s biggest losers last week
- 3 things that will impact on ASX shares this reporting season
- BlueScope’s earnings to halve as it takes $200m write-down
- Origin Energy share price flat on non-cash charge of $1.2 billion
Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The post Origin share price falls along with demand for gas and electricity appeared first on Motley Fool Australia.
from Motley Fool Australia https://ift.tt/2Pd2ew8
Leave a Reply